Trump triggers flight from US dollar, yen steadies
The dollar was hovering near multi-year lows on Wednesday after investors aggressively sold the greenback as U.S. President Donald Trump appeared unconcerned about its recent decline and Wall Street headed for new record highs.
The dollar’s decline pushed the euro above US$1.20 ($A1.72) for the first time since 2021, sent the Australian dollar to a three-year high above 70 cents and sent gold and commodity prices counted in dollar terms sharply higher.
The weak yen pulled away from recent lows before trading stabilized in the early hours of the Asian session.
When a reporter asked him if the dollar had fallen too much lately, Trump replied, “The dollar is doing great.”
Ahead of the comment, the dollar posted its biggest three-day decline since the impact of last April’s tariff attack and markets unsettled by Trump’s erratic Greenland diplomacy and signals that the United States is willing to help Japan raise the yen.
“FX market participants are always looking for a trend to jump on,” said Steve Englander, head of global G10 FX research at Standard Chartered in New York.
“Officials usually push back against sudden currency moves, but when the President expresses indifference or even approves of the move, it emboldens USD sellers to keep pushing.”
The Federal Reserve Bank of New York last week controlled the dollar’s price against the yen and the market took that as a signal that U.S. officials would not mind and might even help Japan push the yen higher, a source told Reuters.
The tumultuous first year of Trump’s second term has caused the dollar to fall more than 9.0 percent in 2025 (the biggest decline since 2017) as his attacks on the Federal Reserve’s independence, spending and foreign policy roiled investors.
The weakening dollar helped gold hit a new record of US$5,188.95 ($A7,443.31) per ounce overnight and US crude oil surpassed its 200-day moving average at US$62.54 ($A89.71) per barrel for the first time in six months.
Bitcoin largely missed the rise and remained steady below US$90,000 ($A129,101). Benchmark 10-year Treasury yields were slightly higher in Tokyo at 4.237 percent.
On Wall Street, health insurers fell sharply after the Trump administration proposed a much smaller increase in government payments to insurers than investors expected.
But the S&P 500 rose 0.4 percent to a record closing high and futures in Asia rose 0.1 percent.
In regional markets, Australian shares made small gains, with South Korea’s KOSPI index rising 1.7 percent to a record high and Japan’s Nikkei index, which tends to move inversely against the yen, falling 0.7 percent.
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