18/04/2017 - Trump Concerned Over Dollar Strength

USD

In an interview late last week, President Trump commented that the US dollar 'is getting too strong' and he would prefer the Federal Reserve to keep interest rates low. Mr. Trump also confirmed that his administration won't label China a currency manipulator, as he is hoping to get them on board in his approach against North Korea.

A Labour Department report released on Thursday showed that U.S. producer prices fell in March for the first time since August 2016, weighed down by a drop in the cost of services and energy products. However, the biggest year-on-year increase in five years still suggests that inflation is rising. Most consumer inflation measures are now above the Federal Reserve's 2 percent target, and this could encourage the central bank to increase interest rates again in June.

U.S. consumer sentiment unexpectedly strengthened in early April, as consumer optimism on current economic conditions climbed to its strongest level since November 2000, a private survey showed. The University of Michigan Surveys of Consumers said their preliminary April consumer sentiment index had risen to 98.0, up from the March reading of 96.9. Expectations had been for 96.5.

GBP

The Pound hit a six-week high against the Euro on Thursday, as worries ahead of the first round of the French presidential election and a week of upbeat data in the UK gave the British currency some respite. Late in the day, Sterling lost momentum as the Dollar began to recover from a brief dip  following President Trump’s comments on it’s strength.

EUR

The Euro lost ground versus the Pound late last week,  over the rise in popularity of Jean-Luc Melenchon, a far-left candidate in the French presidential race. Should Melenchon continue to improve his position in the polls into the first round, this will likely weaken the euro further.

Centrist candidate Emmanuel Macron and far-right leader Marine Le Pen are still frontrunners in the French race, however Melenchon, who for most of the campaign was not given much attention, has recently surged into the top four and is now not far behind the two leaders. A four-way contest in the election could heighten uncertainty over its result for investors, who have become wary of poll results.

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