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US Dollar Falls after Trump Comments on April 16

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Apr. 18 2018, Updated 3:57 p.m. ET

Trump complains about Russia and China

The US dollar (UUP) came under pressure after Donald Trump, in a tweet, accused Russia and China “playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!” Trump’s complaint has been interpreted as an attempt to escalate tensions to achieve favorable trade negotiation terms. This interpretation led to the decline of the US dollar after the comments on Monday.

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Speculators continue to bet against the US dollar

According to the latest Commitment of Traders report, released on April 13 by the Commodity Futures Trading Commission, large speculators and traders have increased their short positions on the US dollar for a third consecutive week.

According to Reuters calculations, net US dollar (USDU) net short positions increased to -$22.8 billion in the week ended April 13 from -$20.7 billion in the week ended April 6. This amount is a combination of the US dollar’s contracts against the combined contracts of the euro (FXE), British pound (FXB), Japanese yen (FXY), Australian dollar (FXA), Canadian dollar (FXC), and Swiss franc.

Key events for the US dollar this week

The impact of the US-led Syrian strikes seems to have been limited, and focus has now shifted back to ongoing US-China trade war tensions. Any escalation of these tensions could be negative for the US dollar this week. According to data released on Monday, April 16, US retail sales were below market expectations and could tone down Fed expectations for the time being. If there are no negative surprises from Trump, the US dollar could remain supported at these levels. In the next part of this series, we’ll look at the euro’s performance in recent weeks.

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