UNITED STATES, WASHINGTON (OBSERVATORY) — Without waiting for help from the Fed, Trump decided to drop the dollar on his own. The American currency fell sharply after statements by the president, who this time did not limit himself to criticizing the head of the Federal Reserve System.
On his Twitter, he wondered who the big enemy for the United States was, China or Jerome Powell, after which Trump added that he was preparing what would be announced shortly.
“My only question is: who is our biggest enemy – Jay Powell or Chairman Xi Jinping? It’s just unbelievable that they can talk without knowing or asking what I’m doing and what will be announced soon. We have a very weak Fed and too much dollar ”
The market perceived these words as the upcoming interventions that the US Treasury will conduct in the foreign exchange market in order to weaken the dollar. It is assumed that for this in the offshore market they will buy up the yuan against the dollar.
The formal grounds for intervention by the US president are given by China’s recognition of the “currency manipulator.”
The dollar index against a basket of six major currencies fell sharply against this background, and the main euro / dollar pair literally in an hour soared by a percentage.
This movement has not yet been continued, and the risk of such actions is very high. It will be an open currency war, to which China will certainly respond.
As a result, global markets will be gripped by a severe panic.
China has previously stated that “US currency intervention will lead to market turmoil and unprecedented political repercussions.”
It is also worth noting that while the offshore yuan, on the contrary, is rapidly becoming cheaper against the dollar, updating new lows.
The situation is extremely confusing. Trump could theoretically bluff, all the more so since most experts openly say that Trump is manipulating markets. Indeed, we have seen many times how Twitter posts have had a major impact on quotes.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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