USD: Damage already done from Mnuchin’s ‘weak dollar’ comment - ING

Viraj Patel, Research Analyst at ING, explains that it feels like what they expected to happen to the dollar over the entirety of 2018 has in fact transpired in first few trading weeks of the year.

Key Quotes

“The latest fuel that has been added to the fire of $ weakness was US Treasury Secretary Mnuchin’s comment that a “weaker dollar is good” for the US. While one could see this as a fairly blasé comment, history books in the future may show this as a marked shift in US economic policy. But equally this isn’t new news; the administration’s desire for a weaker dollar has been embedded in our thinking since last April – when President Trump said in an interview that he felt the US dollar was “too strong”.”

“We suspect it is the sheer frankness of Mnuchin’s comment and the idea that the Trump administration is happy to employ ‘America First’ policies – even if it means at the cost of a weak $ – that has caught markets by surprise. Still, we’re scratching our heads for catalysts to see a break in this weak $ trend – and at the moment it could be one way traffic (bar any major surprises from the ECB today).”