Investing.com - The U.S. dollar turned down Wednesday after President Donald Trump launched another broadside against the euro zone and China, accusing of them of engaging in competitive devaluations to "take advantage" of the U.S.
His comments are the clearest hint yet that the administration considers itself in a 'currency war' with major trading partners, something that analysts fear could deal further blows to global business confidence and trade.
"These people are devaluing their currency because they’re not doing well against us," Trump told Fox Business News in an interview. "So they devalue and we can’t. We are no longer on a level playing field."
Trump had earlier again voiced frustration with Federal Reserve Chairman Jerome Powell for not cutting interest rates, less than a day after Powell said in a speech that the Fed still wanted to see how badly the economy is slowed down by the ongoing trade war with China. Powell's comments had helped lift the dollar from a three-month low, which it hit last week after the central bank opened up the door for rate cuts this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.1% to 95.713 by 10:39 AM ET (14:39 GMT).
Trump told Fox that Powell was doing "a bad job" in not cutting rates, and compared him unfavorably to European Central Bank President Mario Draghi, who said last week that the Eurozone economy would need further stimulus if inflation failed to pick up.
"We should have Draghi instead of our Fed person, you know," Trump said.
The dollar index which measures the greenback against a background of currencies, fell around a quarter of a percent after the interview, after having risen overnight on the back of Powell's comments. By 1 PM ET (1600 GMT), it was at 95.583, down 0.1% on the day.
The dollar had risen earlier in the day after Treasury Secretary Steve Mnuchin said a U.S.-China trade deal is "90% complete.” Separately, Trump told Fox that he is “very happy” with the current trade situation with China.
Trump and Chinese President Xi Jinping are due to meet Saturday on the sidelines of the G20 summit and traders are hoping the two will avoid escalating trade tensions.
Official U.S. comments contrasted with some voices out of China. Hu Xijin, editor-in-chief of the Global Times, an English-language mouthpiece for Beijing, tweeted that "No Chinese official now speaks with such optimism. With dozens of hours left before Xi-Trump summit, Chinese state media has been keeping criticizing the U.S. harshly, a situation that never happened in the previous China-U.S, summits."
Elsewhere, the euro was up 0.2%, with EUR/USD up at $1.1383, while GBP/USD was flat at $1.2693 and USD/CAD fell 0.4% to 1.3110.
Earlier, there had been little reaction to the day's big data release. Durable goods orders for May fell by 1.3%, well below expectations, although the news was leavened by the fact that core durable goods orders, which strips out the volatile transportation sector, rose 0.3%.