US dollar set for worst Jan in 30 years after Trump, Navarro comments

[NEW YORK] The US dollar tumbled against rivals on Tuesday and was on course for its worst January in three decades after President Donald Trump commented on currency devaluation by other countries and his trade adviser remarked on the euro.

Mr Trump, in a meeting with the chief executives of several top drugmakers on Tuesday, said currency devaluation by other countries had increased drugmakers' outsourcing of their production and called on the companies to make more of their products in the United States.

The comments intensified expectations that the new US administration was making moves to talk down the greenback just hours after Mr Trump's top trade adviser, Peter Navarro, told the Financial Times that Germany is using a "grossly undervalued" euro to gain advantage over the United States and its own European Union partners.

"(Trump) is clearly making comments that seem to suggest that what other countries are doing is not fair," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.

"If this is an indication that the US Treasury's policy is changing with regard to the dollar, that would be significant."

The US dollar plunged by nearly 1.5 per cent against the Japanese yen after the comments from Mr Trump and Mr Navarro, hitting its lowest since Nov 30 of 112.07 yen.

The euro gained more than one per cent against the US dollar to US$1.0811, its highest since Dec 8.

The US dollar index, which measures the greenback against a basket of six major rivals, hit its lowest since Dec 8 of 99.430 and was set to decline about 2.6 per cent for the month, its biggest decline since March 2016 and its worst start to the year since 1987.

Mr Trump's comments are "weighing on a marketplace that was positioned quite long dollars coming into the year," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

"You're seeing some more entities running for the doors."

Speculators have pared back favourable bets on the US dollar in recent weeks, but the value of the US dollar's net long position still totalled US$20.04 billion in the week ended Jan 24, data from the Commodity Futures Trading Commission released and calculations by Reuters have shown.

Investors bought the US dollar strongly after Mr Trump's victory last November on the assumption that he would spend aggressively on infrastructure and boost inflation, but that enthusiasm has waned in the absence of much detail on fiscal policy.

REUTERS