The US Dollar is declining to a six-week low following the inauguration of President Donald Trump last Friday although the slump was widely believed to have been led by the all-time highs that the greenback hit during the past month following the results of the presidential elections. The stronger US dollar during the past month has led a recovery to the US economy as the new administration offered positive outlooks aided by the interest rate hike signal given by the US Federal Reserve late last year.
Despite the bullish outlook during earlier this month, the greenback weakened largely against a basket of other currencies as investors raised their concerns and fears over President Trump’s agenda for the economy, although his plans to expand infrastructure spending in the country might potentially boost the US dollar.
End of TPP Deal
The US dollar which started a downward trend last week dropped even further on Monday after news broke that President Trump signed the country’s withdrawal from the Trans-Pacific partnership trade deal. The partnership which has been pushed by the former administration was originally started so that the US and eleven other countries in the Pacific Ocean can have one single market to trade in making it easier to trade easier between the countries, freely, and less expensive.
The deal also initially aimed to reach the goal of bringing down import expenses, benefit labor overseas and to increase exports from the country by $123 billion. Trump ended the deal shortly after his inauguration stating that he believes that the deal will threaten laborers and wages in the country although initial proponents of the deal were to increase jobs, create better salaries, and eventually stimulate the economy.
Dollar Vs Other Majors
On Monday, the dollar was down by 0.8% on the WSJ Dollar Index against 16 other currencies to 90.77 in New York recording the currency’s lowest closing price for the past two months. US 10-year treasury yields
Against six other currencies, the greenback pushed down by 0.8% to 99.9660 during late Monday trading in New York as dropping below 100 while the Dollar Index spot lost as much as 3.2% coming from a 52-week high last December 20 of 103.25.
Against the yen, the US dollar has pushed back to as much as 1.7% and as low as 112.52 yen trading below its 20-day SMA of 114.154 and 50-day SMA of 114.611. The pair closed lower at 113.185 from opening at 113.297.
Meanwhile, commodity currencies such as the New Zealand dollar gained higher against the US dollar on Monday while the Canadian dollar posted the highest intraday volatility trading as high as 1.3335 before it closed during the day at around 1.3250.
The Sterling also traded higher against the greenback to a one-month high following the weak outlook Trump offered investors during his speech with the pound trading as high as $1.2496 against the dollar.
The greenback has traded higher against other majors days before his official inauguration driven by investor hopes that statement from Trump will support the recent gains that the dollar has posted. The TPP decision, however, was unprecedented as the goal of the deal was to increase the quality of labor in the country. The dollar should pair some more losses should Trump decide to keep cutting trade ties with other countries and organizations.