US Dollar Plummets as Janet Yellen Rejects Trump Agenda for Financial Regulations

The US dollar plummeted against all other major currencies on Friday after a speech by Federal Reserve Chairwoman Janet Yellen that raised uncertainty toward near future monetary policy. Her speech also raised concerns that the Trump administration may have a hard time bring the president’s promises into reality.

Despite high anticipation between investors for comments on US monetary policy during the Economic Policy Symposium, Yellen had no remarks on the Federal Reserve’s plans. Investors hoped that the conference, which is held in Jackson Hole, Wyoming, would bring out clues on the timing of the next interest rate hike.

Yellen’s speech was also void of any details on the Federal Reserve’s plans for its balance sheet. The central bank has previously signaled that it may announce the start of tapering its massive $4.5 trillion balance sheet in September.

However, her speech went over President Donald Trump’s plans for cutting financial regulations. Yellen said that the 2008 Dodd-Frank legislation, which Trump promised to remove as a part of his plans to overhaul the financial system, greatly contributed to strengthening the US financial environment.

Yellen’s comments supported expectations that Trump may not reappoint her for another term, and instead nominate former Goldman Sachs President Gary Cohn. Investors have been mostly let down by the Trump administration so far, as it failed to bring major economic and financial items on the president’s agenda into reality. It remains to be seen whether the Federal Reserve would provide more help under a different chief.

Today’s economic data provided little support to the US dollar, as an increase in orders for core durable goods was largely offset by a bigger drop in durable goods orders. The US Census Bureau reported that new orders for durable goods dropped 6.8% in July after gaining 6.4% in June. Analyst had forecast a 6.0% drop, however, a 19.0% decrease in orders for transportation equipment led to bigger losses.

Meanwhile, orders for core durable goods, which exclude transportation, rose 0.5% last month following a 0.1% gain in the previous month. The increase in July exceeded expectations of a 0.4% gain.

EUR/USD traded at 1.1872 as of 18:45 GMT on Friday after touching 1.1887 at 17:00 GMT, the pair’s highest level since August 8. EUR/USD began trading today at 1.1793.

The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, dropped to 92.77 as of 18:45 GMT today, the index’s lowest level since January 2015, from 93.27 yesterday.

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