The U.S. dollar had the worst January in thirty years, an end which was solidified on the final day of the month after statements by Donald Trump’s administration that Japan and Germany have been devaluing their currencies in order to create a trade advantage over the United States. Specifically, Trump’s top trade adviser Peter Navarro said that Germany was using a “grossly undervalued” euro to take advantage of its trading partners. Trump offered similar sentiments, saying “Every other country lives on devaluation. You look at what China’s doing, you look at what Japan has done over the years. They – they play the money market, they play the devaluation market, and we sit there like a bunch of dummies.”
Investor hopes for Trump’s fiscal stimulus plan have been called into question following the new president’s ban on immigration from seven blacklisted countries that was implemented last weekend by executive order. The Federal Reserve which is concluding its two-day policy meeting later today, is expected to keep interest rates steady while it waits to hear more about Donald Trump’s economic policy implementation. Several interest rate hikes are still expected later this year. The S&P fell on Tuesday for the fourth consecutive trading session though it still closed January in the green.
The greenback erased some of Tuesday’s losses during Wednesday’s Asian session, trading at 112.94 yen, still well below Monday’s peak of 115.01. The euro eased 0.1 percent to trade at $1.0791 after hitting a seven-week peak on Tuesday. The dollar index fell nearly 1 percent overnight, to near December lows, but it was up 0.2 percent on Wednesday, trading at 99705 .DXY.