Search Share Prices
FX round-up: Dollar ends higher as traders try to decipher policymakers' remarks
The US dollar edged higher after in a volatile day of trading on Thursday, as US president Donald Trump argued at Davos that remarks made during the previous day by the country's Treasury Secretary, Steve Mnuchin had been taken out of context.
Speaking from the World Economic Forum in Davos on Wednesday, Mnuchin reportedly highlighted the benefits of a weaker US currency for the US exporters.
His remarks saw the euro push above 1.25 against the dollar, although it finished the session at 1.2396.
Going the other way, the US dollar spot index clawed back 0.21% after having dropped by as much as 0.86%.
In parallel, the pound dropped from 1.4242 against the greenback to 1.4142.
Later on Wednesday, US Treasury Secretary Wilbur Ross had tried to calm investors, but to little avail, explaining that Mnuchin had not meant to row back on America's long-standing strong dollar bias.
"He wasn't advocating anything. He was simply saying, it's not the world's biggest concern to us right now," Ross told CNBC.
Ross was followed on Thursday by the US president himself, Donald Trump.
In what some traders labeled a none too subtle warning, in his post-policy meeting press conference on Thursday afternoon, European Central Bank chief Mario Draghi stressed that rate-setters in Frankfurt would not target the exchange rate simply to gain a competitive advantage.
However, he and fellow policymakers were concerned "about the overall status of international relations right now".
Commenting on the day's price action, Deutsche Bank's Jim Reid said: "Trying to make sense of the Mnuchin-Trump confusion, DB's FX Strategist Alan Ruskin believes that what you have here is two officials who like a weak(er) USD in the short-term that will help the US trade accounts and support growth, albeit to the point where strong growth will eventually support a strong USD longer-term.
"In Alan's view this is a way of saying that in the short-term a weak USD is good for US trade, and in the long-term a strong USD is good because it is indicative of strong growth a healthy economy. Alan highlights that this is clearly a very confusing message to convey and it's unlikely to either be reported or understood correctly, which doesn't really help the message."