By Sam Forgione
| NEW YORK
NEW YORK The U.S. 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. 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 U.S. administration was making moves to talk down the greenback just hours after 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 U.S. Treasury’s policy is changing with regard to the dollar, that would be significant."
The dollar plunged by nearly 1.5 percent against the Japanese yen after the comments from Trump and Navarro, hitting its lowest since Nov. 30 of 112.07 yen JPY=. The euro gained more than 1 percent against the dollar to $1.0811, its highest since Dec. 8.The dollar index .DXY, 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 percent for the month, its biggest decline since March 2016 and its worst start to the year since 1987.
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 dollar in recent weeks, but the value of the dollar's net long position still totalled $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 dollar strongly after 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. (Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Bill Trott and Grant McCool)
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Published Date: Feb 01, 2017 03:00 AM | Updated Date: Feb 01, 2017 03:00 AM