MW: Dollar falls in aftermath of Trump news conference light on economic detail
The U.S. dollar fell sharply against its major rivals on Thursday after Donald Trump, speaking in his first news conference as U.S. president elect, failed to reassure investors that the buckâs recent advance was justified.
Trump spoke widely but failed to give markets more details of his administrationâs ideas for economic stimulus, trade policy, or taxation. Investorsâ expectations that these plans would accelerate economic growth and stoke inflation have underpinned a rally in the dollar since the election.
A key dollar index is up nearly 3% over the past three months, reaching levels last seen in 2002.
The news conference âfailed to provide the much-needed clarity on future fiscal policies,â said Lukman Otunuga, a research analyst for FXTM. âThe lack of details of the president-electâs administrationâs plans for economic stimulus simply left dollar bullish investors empty-handed. It seems likely that dollar sensitivity intensifies this month as the renewed Trump uncertainty keeps investors on edge.â
The ICE Dollar Index DXY, -0.86% a measure of the greenback against a basket of six rivals, dropped 0.9% to 100.83, trading near its lows of the session. The WSJ Dollar Index BUXX, -0.78% a measure of the U.S. unit against a wider basket of major currencies, was down 0.7% at 91.75.
While the dollar has been in an uptrend of late, the rally has shown signs of stalling. The index is down 1.4% thus far this week.
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The lack of clarity prompted further selling of the dollar against its major rivals following sharp falls on Wednesday. Dollar-yen USDJPY, -1.02% fell 0.9% to Â„114.02, a one-month low, from Â„115.09 late Wednesday in New York.
The euro EURUSD, +0.7655% was changing hands at $1.0675 compared with $1.0587 late Wednesday, a move of 0.8%. The pound GBPUSD, +0.5732% traded at $1.2295 from $1.2193.
Read: How Trumpâs presser threatened to wreck his own stock-market rally
The dollarâs postelection rally is âover for now,â said Takuya Kanda, senior researcher of the Gaitame.com Research Institute, adding that he expects downside pressure on the dollar to continue ahead of Trumpâs inauguration next week.
âDollar selling is more likelyâ as investors who bought the dollar ahead of Trumpâs news conference learned their lesson as the currency slid amid no details on his economic policy, Kanda said.
But Trumpâs inauguration speech will be scripted and could touch on matters most pertinent to global currency and bond markets, economists said.
Read: Blog recap of Trump press conference
Market watchers in Tokyo expressed concerns about Trumpâs mentioning of Japan in the context of trade imbalances, another factor that fed into the yenâs strength Thursday.
SMBC Nikko FX strategist Makoto Noji said investors need to watch the potential for Trump embarking on a major offensive against Japanâs trade surplus with the U.S. A ratcheting-up of rhetoric is plausible, he added.
âWe shouldnât underestimate Trumpâs mentioning of Japanâ along with China and Mexico, said Noji.