Dollar Gains After Mnuchin Walks Back Trump FX Tweet As “Warning Shot”

After tumbling yesterday following President Trump’s FX manipulator tweet, the Dollar Index rebounded overnight (on a collapse in German economic confidence) and is extending gains now after Treasury Secretary Mnuchin told CNBC that Trump’s tweet was not a signal for a weaker dollar but a “warning shot” to Russia and China not to devalue their currency in the future.

The initial gains overnight in the USD were due to EUR weakness after ZEW survey showed economic expectations in Germany have collapsed to 6 years lows…

But then Mnuchin rescued the dip (for now)…

 

As a reminder, and as Mnuchin acknowledged, both have sen their currency’s strengthen in the past year or so…

And that is apparently the way President Trump wants it to stay.