• Trump expresses dissatisfaction with possible rate hikes
  • Markets respond by punishing USD
  • GBP nevertheless weakens after weak retail data

The USD had a losing streak against its major competitors on Thursday after US President Donald Trump expressed unhappiness about Fed rate increases. The losses were limited, however, because markets remain optimistic about US economic prospects.

The USD Index, a measure of the currency’s strength against six major global currencies, first reached 95.44 before ending 0.08% lower at 94.75.

In a CNBC interview, Trump said: “I’m not happy about it; higher rates put us [United States] at a disadvantage.”

However, he stressed that he would allow the Federal Reserve to “do what they feel is best.”

His remarks eroded some of the positive investor sentiment about the possibility of faster rate increases after comments by Jerome Powell, the Fed Chairperson, a few days ago.

The USD did not drop by much as strong economic reports confirmed investors’ belief that the US economy is still on solid ground.

The US Department of Labor, for example, reported yesterday that initial jobless claims have dropped to 207,000 (-8,000) for the week that ended July 14. This exceeded economists’ predictions that it would fall to 220,000.

The Philadelphia Federal Reserve said on July 19 that its manufacturing index improved from 19.9 in June to 25.7 in July.

The EUR/USD strengthened to 1.1668 (+0.25%).

The demand for safe-haven currencies remained relatively strong, with both the Swiss franc and the Japanese yen strengthening against the dollar after concerns resurfaced about the trade war between China and the US intensifying.

The GBP/USD dropped by 0.23% to reach 1.3039, after earlier breaking below 1.3000 because of UK retail sales that were below projections, which hurt the chances of a UK rate hike in August. The CAD also weakened by 0.52% against the USD to reach 1.3237.

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