Dollar Steadies After Drop, UK Business Courts China, More
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The dollar is close to its weakest level in four years after suffering its deepest one-day drop since last year's US tariff rollout. The sudden decline came after President Trump said he didn't think the currency had weakened excessively. The president was asked by reporters if he was worried about the currency's drop.
No, I think it's great. I mean, the value of the dollar, look at the business we're doing. No, no, I'd want it to be just seek its own level, which is the fair thing to do. You could have it, I could have it go up or go down like a yo-yo.
The US president, after he was, after the US president spoke, the Bloomberg Dollar Spot Index extended losses against all of its major counterparts before steadying in Asian trading. The latest moves come as the greenback had its worst year since 2017 last year.
The dollar's sell-off has been fanned by Trump's unpredictable policymaking, which has rattled overseas allies and investors. The latest slide helped to push the Swiss franc to its highest level since 2015, with both the pound and the euro also hitting multi-year highs. European Central Bank Vice President Luis de Guindos has previously suggested that the euro could become an alternative to the dollar, if the EU increases integration. It's a message former European Commission President José Manuel Barroso is also keen to emphasise.
The reality is that the euro remains by far the second most important global currency, much ahead of all the others except the dollar. I think sometimes globally people underestimate the resilience of the European Union and the resilience of the euro.
José Manuel Barroso was speaking to Bloomberg with President Trump's embrace of the weaker dollar seen as a further deterrent to overseas holders of US assets.
The dollar's recent drop comes despite a rise in government bond yields and expectations that the Fed is poised to pause rate cuts at today's meeting. The president, meanwhile, has long accused other countries of seeking weaker exchange rates to boost exports, saying last year, I'm the person that likes a strong dollar, but a weak dollar makes you a hell of a lot more money. Goldman Sachs Vice Chair Robert Kaplan says prolonged weakening brings with it a number of dangers for the US economy.
Yes, it is true a weaker dollar boosts exports. However, we have in the United States has 39 trillion of debt on its way to 40 trillion plus. And when you have that much debt, I think stability of the currency probably trumps exports. And so I actually think the U.S. is going to want to see a stable dollar.
Robert Kaplan speaking there as investors have increasingly shifted into gold and what's becoming known as the debasement trade.
What caused the recent drop in the dollar's value?
The price of bullion rose as much as 1.5% today, having jumped 3.4% yesterday to hit a new record high above $5,200 an ounce.
UK Prime Minister Keir Starmer arrives in Beijing today alongside a business delegation that includes several banking executives. Standard Chartered, HSBC and Barclays will all be represented as the Prime Minister tries to deepen trade ties with China. Bloomberg's James Walcock says there are a number of opportunities in the region.
50 UK company CEOs are going, according to China's Ministry of Commerce, and it wants investment from China. It wants exports. It's worth noting that China currently accounts for roughly 0.2% of foreign direct investment into the UK versus America's 33%.
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