Dollar Tumbles after Trump Declares It “Too Strong”

The U.S. Dollar fell against a basket of currencies on Tuesday after President-elect Trump said the U.S. is losing its competitiveness in the global marketplace because the dollar is “too strong”. He also said the Greenback’s strength against the Chinese Yuan “is killing us”.

Soothing words on Brexit from British Prime Minister Theresa May helped trigger the Sterling’s largest one-day percentage gain since 2008. After rebounding early in the session, the pound spiked higher, catching bearish investors off guard, after May pledged to hold a parliamentary vote on whatever deal Britain eventually reaches to leave the European Union.

The EUR/USD rallied above 1.0700 for the first time since early December and the USD/JPY fell below 113 for the first time since early November.

Crude Oil

U.S. West Texas Intermediate and International Brent crude oil futures were higher in reaction to the weaker U.S. Dollar. However, buyers couldn’t hold on to the early gains after forecasts for record production out of Russia in 2017. In other bullish news, Saudi Arabia said it would adhere to OPEC’s commitment to cut output.

According to Reuters, Russian oil production is expected to reach another post-Soviet record high in 2017 after a global deal to cut output expires at the end of June. Also put a lid on prices is rising production out of Libya, Iran, Iraq and Nigeria.

U.S. Treasurys

U.S. government debt prices rose on Tuesday after President-elect Trump criticized a proposed corporate tax plan from the House of Representatives, noting the plan is “too complicated.”

Gold

February Comex Gold futures rose more than 1 percent to its highest level in nearly two months on Tuesday after Trump drove the dollar lower with negative comments about its value. Trump told the Wall Street Journal in an interview that the dollar was “too strong”. Sending the Greenback lower and making dollar-denominated gold more attractive to foreign investors.

U.S. Equities

U.S. equity markets were under pressure on Tuesday amid concerns over Trump’s ability to run a country. The biggest draw on the benchmark S&P 500 Index was the financial stocks. According to some traders, the major indexes are just consolidating ahead of Trump’s inauguration on Friday. Some traders are holding out hope that he will reveal more details about his plan to rebuild America in his inauguration speech.