The US Dollar exchange rate has had a less than great start to the year; if it wasn’t already under pressure enough, this week saw it fall further, allowing the Euro (EUR/USD) to extend its three-year high, and the Australian Dollar (AUD/USD) to reach a 32-month pinnacle. Even the Pound, which markets have gotten used to languishing around lower down, jumped into action and managed to attain the best level since the Brexit vote in June 2016, crashing through the 1.43 barrier.
This week, US President Donald Trump put the Buck under more pressure as he began to implement tariffs on items such as solar panels and washing machines and it’s no real surprise the Buck backed off as trade disputes have caused USD exchange rate softness in the past.
Then US Treasury Secretary Steven Mnuchin made matters worse when he welcomed the weaker Greenback. Mnuchin said: ‘Obviously a weaker Dollar is good for us as it relates to trade and opportunities.’ He stated that the US Dollar’s short-term pricing was ‘not a concern of ours at all.’
He continued: ‘Longer term, the strength of the Dollar is a reflection of the strength of the US economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency.’
Markets sold off the Buck on these comments and the USD has been on a slippery slope ever since. However, events on Friday could create some additional USD movement. The US Gross Domestic Product (GDP) figure is expected to print slightly lower in the fourth quarter figure, at 3.0% after the previous 3.2% reading. Additionally, the US Durable Goods Orders stat out later in Friday’s session is only expected to reach 0.9% in December, following the 1.3% in November. However, if better-than-expected figures come to light, there’s the possibility the USD could regain some ground. The Bank of England’s (BoE) Governor Mark Carney will be speaking in Davos on Friday and that could be another source of GBP movement.