Strong Dollar policy?

Morgan Stanley has been talking about this for awhile and they picked up on the topic after Mnuchin comments yesterday.As we know with president Trump nothing is out of question so Todays trade balance data and tomorrows Export information within GDP will be something I am watching





The end of the strong dollar policy?

Not yet, but we should watch closely. Comments from US Treasury Secretary Mnuchin yesterday were interesting to us. While formally affirming the strong dollar “over the long term”, what was notably absent was an affirmation that a strong dollar was broadly and unconditionally appropriate. If the US administration rhetoric were to shift to sound more actively encouraging of a weaker USD, investors might start to price in a greater probability of unilateral action to pursue this course. As we noted in our article ‘FAQ on US Intervention Policy’, the US Treasury Department has the means to sell up to US$68 billion unilaterally to weaken USD,and this can be done without Congressional approval and without participation from the Fed. While such action is not our base case, we are watching rhetoric closely to see how the administration’s views on USD evolve.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.