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FOREX-Dollar slides as Trump says currency is "getting too strong"

Published 13/04/2017, 12:39 pm
© Reuters.  FOREX-Dollar slides as Trump says currency is "getting too strong"
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* Dlr/yen slumps to 5-mth low, slips below 200-day moving average

* Trump comments raise wariness over Treasury's currency report

* Aussie pops up on upbeat domestic employment data (Updates prices, adds details and quotes)

By Shinichi Saoshiro

TOKYO, April 13 (Reuters) - The dollar slumped broadly on Thursday, falling to a five-month low against the yen, after U.S. President Donald Trump helped accelerate its recent decline by saying the currency was too strong.

The greenback took a heavy hit after Trump told the Wall Street Journal that the dollar "is getting too strong" and that he would prefer the Federal Reserve to keep interest rates low. comments were a fresh reminder of the president's protectionist trade rhetoric, which has been a source of concern for dollar bulls.

"Trump's comments came at a time when some had begun to think that perhaps the president was not as supportive of a weak dollar as initially perceived," said Shin Kadota, senior strategist at Barclays (LON:BARC) in Tokyo.

"But he reiterated his view that a strong currency hurts U.S. competitiveness, adding fresh downward pressure on the dollar."

The U.S. currency was 0.3 percent lower at 108.805 yen JPY= after stooping to a five-month low of 108.730. In a bearish technical signal, the pair broke below its 200-day moving average of 108.75.

The dollar has shed 2 percent against the yen so far this week, with the safe-haven Japanese currency already on a bullish footing because of a rise in geopolitical tensions.

There are fresh concerns about the French presidential election and possible U.S. military action against Syria and North Korea. With investors viewing South Korea's sovereign notes as a riskier bet on the rising tensions, the premium for the country's credit default swap debt insurance has risen to a nine-month high. Trump seemed unmoved by the significant weakening of the dollar against the yen already in place increased nervousness towards the U.S. Treasury's semi-annual currency report due Friday, and next week's U.S.-Japan bilateral dialogue.

"It appears that the Trump administration is trying to make up for its internal policy shortcomings with a show of force in external policy, leading to a confrontational stance with trade partners," said Daisuke Karakama, market economist at Mizuho Bank.

"Currencies rates and trade balance inevitably become themes to confront others countries with. So if you are in the forex market it requires a lot of courage to buy the dollar right now."

The euro rose 0.1 percent to $1.0669 EUR= , not far from a six-day high of $1.0675 reached overnight.

The dollar lost significant ground against the pound and Swiss franc as well, and as a result the dollar index versus a basket of major currencies lost about 0.7 percent to a two-week low of 100.040 .DXY .

The Australian dollar was given some breathing room as the greenback slumped. Stronger-than-expected domestic employment data also lifted the currency.

It was up 0.5 percent at $0.7567 AUD=D4 , pulling away from a three-month low of $0.7473 plumbed the previous day when wide-spread risk aversion amid simmering geopolitical concerns took its toll on the Aussie.

The dollar was on track for its third straight day of losses against China's yuan CNH=D3 , after rising to a one-month high at the start of the week.

The yield on the benchmark U.S. 10-year Treasury note US10YT=RR was at 2.234 percent after touching 2.221 percent, its lowest in nearly five months.

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