The US Treasury Secretary Steven Mnuchin said that a weak dollar is good for the United States. This statement, a clear shift from the declarations from his predecessors during long decades. The initial reaction was a sell-off across the board, with new highs for most currency pairs against the dollar.
And after the first round of selling, we are seeing a new one, with these three currency pairs standing out:
- EUR/USD initially stalled at 1.2355 and it is now extending its gains. It reached 1.2366 and the gradual crawl higher seems set to continue. The ECB may try to push the euro lower, but it has limited tools against the downfall of the dollar.
- GBP/USD: The UK jobs report was mixed: more jobless claims amid an OK rise in wages. Yet the pound continues its catching up. After conquering 1.41 after the publication, pound/dollar continues higher and has already reached 1.4194.
- USD/CAD did not initially fall to new lows after Mnuchin’s words. The 1.2335 level held up quite well. Yet this has changed as well with a drop to 1.2317. More: CAD: Everything is ready for a rally, except one Donald Trump
Will the US dollar sell-off continue? We still have a speech from US President Donald Trump in Davos and the first release of US GDP. After these huge losses, a bounce-back cannot be ruled out.
More: USD Index, EURUSD, and Bund Elliott Wave Video Analysis
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