Dollar falls against the pound, euro on August 21 after Trump criticises Fed

Donald
Trump’s comments are hurting the dollar.
iStock; Olivier Douliery-Pool/Getty Images; Samantha
Lee/Business Insider

LONDON — The dollar is falling against the pound and euro on
Tuesday morning after US President Donald Trump publicly
criticised the Federal Reserve for raising interest rates.

Trump said in an interview with Reuters on Monday that he was

“not thrilled” by Fed chairman Jerome Powell’s decision to raise
interest rates and would continue to criticize the Fed if
interest rate hikes continued. It followed reports earlier in the
day that Trump had criticised Powell at a private GOP fundraiser.

Trump has attacked the Fed for raising rates in the past. The
latest remarks have hurt the dollar as investors’ expectations of
future rate hikes have now been dampened.

The
greenback is down 0.27% against the euro to 0.8680 at
the time of writing (8.30 a.m. BST/3.30 a.m. ET), while the
dollar is down 0.21% against the pound to 0.7798. The US
dollar index, which measures the greenback against a basket of 6
major currencies, is
down 0.19% to 95.55.

Neil Wilson, the chief market analyst at Capital.com, said in an
email on Tuesday morning: “Trump’s not thrilled with the Fed
raising rates. At the same time, he accused China and the EU of
currency manipulation. Taken together with previous comments, we
see a clear pattern of the president willing to talk the USD
lower whenever it starts to look a bit toppy.

“Two ways to look at this: one, if done enough times it can exert
a powerful influence over market expectations. Two, comments like
these will produce diminishing returns for the president. I think
on this one the market will come round again and
the dollar bounces back, but nonetheless, it does
appear the market is worried that the president will exert
influence on Fed policy.”