Oil and the US dollar fall on Trump’s Davos comments

The US dollar declined modestly across the board during Trump’s appearance in Davos after initially rallying.

Trump talked about tariffs across the board as a way to raise money for tax cuts. On the initial talk of tariffs, the US dollar briefly jumped but that move was steadily faded afterwards. It’s shown on the cable chart in a drop to 1.2300 then up to 1.2350.

Perhaps some of the selling was on Trump talking about lowering interest rates, though he certainly doesn’t have the power to overrule the Federal Reserve.

The bond market hasn’t exactly endorsed the move with 10-year yields still up 4.5 bps on the day and near the highs. Two year yields are down about 1.5 bps so maybe there is some fuel there but it’s tough to square.

A bigger move came in oil, which fell about $1.20 to $74.50 after Trump said he would ask Saudi Arabia and OPEC to “lower the price of oil”.

This article was written by Adam Button at www.forexlive.com.