Donald Trump maintained his protectionist approach to the presidency as he signed an executive order for the US to formally pull out of the Trans-Pacific Partnership (TPP). The President further concerned the currency markets when he mentioned that “very major” border taxes will be applied to any products made abroad but sold in the USA, pushing the dollar (USD) to 1 month lows. Traders are now becoming increasingly worried about President Trump’s plan to renegotiate the North American Free Trade Agreement with Mexico and Canada.
The euro (EUR) is managing to hold out at 6 weeks highs against the dollar, while the dollar is at 1 month lows against the pound (GBP). Further dollar weakness was attributed to the comments made by US Treasury Secretary Steven Mnuchin, who echoed his boss by calling for a weaker US currency. The dollar had soared during the 8 weeks following Trumps surprise win, due to expected infrastructure spending and faster interest rate hikes; however, this rally has been stopped in its tracks over the past 3 weeks, causing the dollar to give up 3.5% of its gains.
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