NEW YORK (Reuters) - The dollar fell broadly on Wednesday after U.S. President Donald Trump said the dollar was “getting too strong” and that he would prefer that the Federal Reserve keep interest rates low.

FILE PHOTO: Light is cast on a U.S. one-hundred dollar bill next to a Japanese 10,000 yen note in this picture illustration shot February 28, 2013. REUTERS/Shohei Miyano/Illustration/File Photo

Trump also said, during an interview with the Wall Street Journal, that his administration would not label China a currency manipulator, reversing a campaign trail pledge to do so. He also left open the possibility of renominating Federal Reserve Chair Janet Yellen when her term expires next year.

The dollar index .DXY, which tracks the U.S. currency against six major rivals, fell to its lowest since March 30 after the news.

“The market had a big reaction, but I think it was an overreaction,” said Kathy Lien, managing director at BK Asset Management in New York. “He may just be hedging his bets by making sure that the American public realizes he’s not backing down on trade.”

Lien also said she expected Trump’s comments could weigh on the dollar in the long term. It has fallen every day this week as worries over geopolitical tensions have prompted investors into safe havens like the yen, U.S. Treasuries and gold.

“The dollar’s already under pressure, so I think any excuse for further pressure is likely to bring the greenback even lower,” Lien said.

The dollar fell by more than 1 percent against the yen on Tuesday, its biggest one-day fall in three months against the Japanese currency. The greenback fell below 110 yen for the first time since mid-November JPY=. On Wednesday, it furthered those losses and was last down 0.5 percent at 109.1 yen, its lowest since Nov. 17.

Against the traditionally safe-haven Swiss franc, the dollar dropped CHF= to 1.0024 franc, its lowest in a week.

The euro EUR= rose 0.6 percent against the dollar to a 6-day high of $1.0671.

The dollar also sank against the offshore Chinese yuan CNH= after Trump's comments. The typically little-moved Chinese currency fell 0.15 percent to a five-day low of 6.8847.</s>Gold rose to a five-month peak on Thursday amid rising tensions over U.S. relations with Russia and North Korea, with prices also buoyed as the U.S. dollar slid after President Donald Trump reportedly said the currency was too strong.

Spot gold earlier rose as much as 0.2% to 1,287.98 per ounce, the highest since Nov. 10. It was at $1,285.22 per ounce at 0713 GMT.

The U.S. dollar took a heavy hit after Trump told the Wall Street Journal the dollar “is getting too strong” and that he would prefer the Federal Reserve to keep interest rates low.

“We see a lot of safe-haven buying coming back to the market ... People are worried about currency and with conflicts around the globe, a lot of funds are coming to gold at this point of time,” said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.

“The market is slightly on the overbought side, but given what we have seen in the past few days, we might see prices testing $1,300.”

Spot gold is expected to climb to $1,303 per ounce as it has broken above resistance at $1,282, according to Reuters technical analyst Wang Tao.

“We might see a bit of profit taking ahead of the Easter weekend,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

“But, we see prices going up further on global tensions and a weaker dollar, especially after Trump’s comments.”

The dollar slumped broadly on Thursday, falling to a five-month low against the yen.

The dollar index, which measures the greenback against a basket of currencies, was down 0.6% at 100.050.

“The Fed remains on track to raise rates two more times this year, but markets have yet to focus on a June increase, figuring that the Fed has time to perhaps change its forward guidance (if not its decision altogether),” said INTL FCStone analyst Edward Meir.

Higher interest rates reduce investor appetite for non-interest bearing gold while the weaker dollar makes gold more affordable for buyers paying in other currencies.

Meanwhile, tensions continued over the United States’ relationship with Russia over Syria and in the Korean peninsula, while worries about the upcoming French presidential election also kept investors nervous.

Russian President Vladimir Putin said on Wednesday trust had eroded between the United States and Russia under Trump as Moscow delivered an unusually hostile reception to Secretary of State Rex Tillerson in a face-off over Syria.

South Korea said on Thursday it believed it would be consulted by the United States before any possible pre-emptive U.S. strike against Pyongyang and China urged the North to halt its nuclear programme in exchange for greater protection from Beijing.

Spot silver was up 0.1% at $18.47, after hitting a five-month high of $18.56.

Platinum rose 0.4% to $972.20, while palladium was up 0.8% at $803.65.</s>The U.S. dollar dropped suddenly on Wednesday after President Trump said the currency was "getting too strong" in an interview with The Wall Street Journal. The dollar hit a low of 109.08 against the Japanese yen, its lowest level since November.

The U.S. dollar index, a basket of the greenback versus major currencies, dropped 0.5 percent in less than 15 minutes at around 3:10 pm ET following Trump's comments, which were unusual for a leader about their country's currency. The index remained lower by about 0.5 percent in late-afternoon trading.

The euro touched a high of 1.0658 against the dollar, its highest since April 7.

"I think our dollar is getting too strong, and partially that's my fault because people have confidence in me. But that's hurting—that will hurt ultimately," Trump said in the interview with the WSJ.

The dollar index is still up a little more than 2 percent since Trump was elected.</s>President Donald Trump said on Wednesday that the dollar was “getting too strong” and would eventually hurt the U.S. economy, even as he said he would like to see interest rates stay low, the Wall Street Journal reported.

In an interview, Trump also said he would not label China a currency manipulator in a U.S. Treasury report due later this week, the Journal said. He also said he respected Federal Reserve Chair Janet Yellen, saying she was “not toast” when her current term ends in 2018.

“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting – that will hurt ultimately,” he said.</s>The dollar slumped broadly on Thursday, falling to a five-month low against the yen, after U.S. President Donald Trump helped accelerate its recent decline by saying the currency was too strong. The greenback took a heavy hit after Trump told the Wall Street Journal that the dollar “is getting too strong” and that he would prefer the Federal Reserve to keep interest rates low. The comments were a fresh reminder of the president’s protectionist trade rhetoric, which has been a source of concern for dollar bulls. “Trump’s comments came at a time when some had begun to think that perhaps the president was not as supportive of a weak dollar as initially perceived,” said Shin Kadota, senior strategist at Barclays in Tokyo.

“But he reiterated his view that a strong currency hurts U.S. competitiveness, adding fresh downward pressure on the dollar.” The U.S. currency was a shade lower at 109.000 yen after stooping to a five-month low of 108.920. It has shed 1.8 percent against the yen so far this week, with the safe-haven Japanese currency already on a bullish footing because of a rise in geopolitical tensions.

There are fresh concerns about the French presidential election and possible U.S. military action against Syria and North Korea. The euro was steady at $1.0669, not far from a six-day high of $1.0675 reached overnight. The dollar lost significant ground against the pound and Swiss franc as well, and as a result the dollar index versus a basket of major currencies was down 0.6 percent at 100.100 .

The Australian dollar was given some breathing room as the greenback slumped. It was up 0.2 percent at $0.7542, pulling away from a three-month low of $0.7473 plumbed the previous day when wide-spread risk aversion amid simmering geopolitical concerns took its toll on the Aussie. The yield on the benchmark U.S. 10-year Treasury note was at 2.244 percent after touching 2.239 percent overnight, its lowest in nearly five months.</s>The dollar fell to session lows against a basket of major currencies on Wednesday, after President Donald Trump said the currency is getting too strong while geopolitical concerns continued to weigh on sentiment.

President Trump told the Wall Street Journal on Wednesday, that he thinks the currency (dollar) is getting too strong and hinted that he may reappoint Janet Yellen to chair the Federal Reserve Board when her term ends in 2018, as he added "I do like a low-interest rate policy, I must be honest with you,"

It wasn't the first time President Donald Trump expressed concern over the strength of the dollar, after he previously warned in January, that a soaring greenback has disadvantages for U.S. companies that do a lot of business abroad.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, fell by 0.31% to 100.31.

Trump's comments came against rising geopolitical tensions, which has caused a flight to safety, as investors shun risk assets in favor of traditional safe-haven assets such as gold, U.S. treasuries and the yen.

USD/JPY fell by 0.37% to trade at 109.17 while USD/CAD dipped 0.38% to $1.3276.

GBP/USD traded higher at $1.2532 while EUR/USD traded at $1.0659, up 0.53%.

The slump in the dollar boosted dollar-denominated gold prices, as the yellow metal rose $9.75, or 0.77%, to $1,283.95 a troy ounce by 16:48 EDT.

Dollar denominated assets such as gold are sensitive to moves in the dollar - a slump in the greenback, tends to increase demand for the yellow metal, as it becomes cheaper for foreign buyers.</s>President Trump told the Wall Street Journal that the U.S. dollar “is getting too strong” and he would prefer the Federal Reserve keep interest rates low.

Said Trump: “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me.”

He also made a full reversal from the campaign by stating his support for the U.S. Export-Import Bank: “It’s a very good thing. And it actually makes money, it could make a lot of money.”</s>President Trump complained to The Wall Street Journal on Wednesday that the dollar is "getting too strong," immediately sending the dollar tumbling to session lows:

"I think our dollar is getting too strong, and partially that's my fault because people have confidence in me," Trump said. "But that's hurting — that will hurt ultimately," he went on. "Look, there's some very good things about a strong dollar, but usually speaking, the best thing about it is that it sounds good."

By the time of publication, the 10-year mark had wobbled back up — although the dollar index continued to slip:

CNBC added that "the flight to safety underpinned traditional safe havens like the yen, U.S. Treasuries, and gold amid new concerns about France's presidential election and the United States' relations with Syria and North Korea." Jeva Lange</s>The dollar slumped broadly on Thursday, falling to a five-month low against the yen, after U.S. President Donald Trump helped accelerate its recent decline by saying the currency was too strong.

The greenback took a heavy hit after Trump told the Wall Street Journal that the dollar “is getting too strong” and that he would prefer the Federal Reserve to keep interest rates low.

The U.S. currency hit a five-month low of ¥108.73 in Asian trading but later steadied around ¥109.

The comments were a fresh reminder of the president’s protectionist trade rhetoric, which has been a source of concern for dollar bulls.

“Trump’s comments came at a time when some had begun to think that perhaps the president was not as supportive of a weak dollar as initially perceived,” said Shin Kadota, senior strategist at Barclays in Tokyo.

“But he reiterated his view that a strong currency hurts U.S. competitiveness, adding fresh downward pressure on the dollar.”

Trump’s comments broke with a long-standing practice of both U.S. Democratic and Republican administrations of refraining from commenting on policy set by the independent Federal Reserve. It is also unusual for a president to talk about the value of the dollar, a subject usually left to the U.S. Treasury secretary.

The dollar has shed 2 percent against the yen so far this week, with the safe-haven Japanese currency already on a bullish footing because of a rise in geopolitical tensions.

There are fresh concerns about the French presidential election and possible U.S. military action against Syria and North Korea. With investors viewing South Korea’s sovereign notes as a riskier bet on the rising tensions, the premium for the country’s credit default swap debt insurance has risen to a nine-month high.

That Trump seemed unmoved by the significant weakening of the dollar against the yen already in place increased nervousness toward the U.S. Treasury’s semiannual currency report due Friday, and next week’s U.S.-Japan bilateral dialogue.

“It appears that the Trump administration is trying to make up for its internal policy shortcomings with a show of force in external policy, leading to a confrontational stance with trade partners,” said Daisuke Karakama, market economist at Mizuho Bank.

“Currency rates and trade balance inevitably become themes to confront other countries with. So if you are in the forex market it requires a lot of courage to buy the dollar right now.”

In the interview with the Wall Street Journal, Trump also backed down on a long-held vow to label China a currency manipulator.

“While we can count on the fingers of one hand the number of times Presidents Obama or Bush talked about the U.S. dollar’s value, President Trump is of course happy to be different,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “It is clear that he does not regard talking about the currency as manipulation, rather just plain speaking.”

While history shows the impact of talking down a currency is usually short-lived, Trump deciding to comment directly on the greenback could ultimately hurt his own credibility, given he repeatedly accused nations such as China and Germany of weakening their currencies to fuel an unfair trade advantage over the U.S.

“Of course, he’s risking his credibility, but Trump doesn’t seem to care,” said Axel Merk, president of Merk Investments LLC in San Francisco. “The cheapest policy is one where you can move the currency around by word of mouth. So he might be encouraged.”

China, the country that drew most of Trump’s ire when it comes to alleged manipulation, appeared to be a beneficiary of his jawboning. While the yuan rose 0.2 percent versus the dollar as of 1:30 p.m. in Shanghai, it weakened against other major peers, falling 0.2 percent versus a replica of the 24-currency basket Chinese policymakers use to track the yuan, the most since March 21.

“Trump is now returning a little gift to China after Xi’s visit last week,” said Nathan Chow, an economist in Hong Kong at DBS Bank. “This is an easy gift, anyway, as China doesn’t meet all the Treasury’s requirements as a manipulator.”

The U.S. is expected this month to release its first report under Trump on foreign currency practices. This is the formal channel to impose a manipulator designation and can lead to negotiations and penalties. The department is required by law to report to Congress twice a year on whether America’s major trading partners are gaming their currencies.</s>The pound swung wildly against the dollar yesterday after Donald Trump warned the greenback was 'too strong'.

In almost unprecedented comments that sent shockwaves through financial markets, the US President said he would prefer his currency to be weaker – while claiming its strength was based on his leadership abilities.

His words sent the greenback plummeting 0.7 per cent against the pound, which hit a monthly high of $1.2574 before later losing that ground. By 5pm sterling was down 0.2 per cent at $1.2516.

'I think our dollar is getting too strong, and partially that's my fault because people have confidence in me,' Trump said in an interview.

'But that's hurting – that will hurt ultimately. Look, there's some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.

'It's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.'

The pound fared better against the euro, rallying to a six-week high as traders' thoughts turned to the French presidential elections and the nightmare risk of a Eurozone break-up should far-right candidate Marine Le Pen unexpectedly triumph.

It ended up 0.15 per cent to €1.1771.

But Trump's comments were the main market mover on the day, marking a dramatic split with protocol which means most leaders never talk about currency markets.

It follows comments in January, when he said the dollar was 'killing us' by driving manufacturers abroad, where labour was cheaper.

Shortly after his election, the President allegedly called national security adviser Mike Flynn at 3am to ask if a stronger or weaker currency was better for the economy.

Flynn is said to have replied that it wasn't his area of expertise. As well as railing against the dollar's strength, Trump also used his Wall Street Journal interview to U-turn on a host of issues, including the reappointment of Janet Yellen as head of the Federal Reserve.

Trump previously said Yellen 'should be ashamed of herself' and attacked her for keeping interest rates artificially low for political reasons.

But yesterday he announced that she was 'not toast' when her term of office ends in January and refused to rule out backing an extension to her time in charge.

'I like her, I respect her,' Trump said. 'It's very early.'

He also abandoned plans to brand China a currency manipulator which was keeping the renminbi artificially low to boost trade – something he once pledged to do on his first day in office.

Market watchers were stunned by Trump's words, seeing them as fresh evidence of his unpredictable attitude.

Chris Beauchamp of IG said this uncertainty had sent some investors running for the hills, with their cash moved to less risky assets such as gold and the Japanese yen.

'First we had the 'Trump bump', then the 'Trump slump', now we perhaps have a Trump volte-face?' he said.

'It looks like someone in Washington has laid out the facts for the President.

'It is, of course, folly to try to work out policy from the President's statements, but the shift to safe havens goes on.'
In an interview, U.S. President Donald Trump says the U.S. dollar is "getting too strong" and wants to keep interest rates low, causing the U.S. Dollar Index to fall.