(Bloomberg) -- White House economic adviser Larry Kudlow said the U.S. administration has “ruled out” currency intervention, but Wall Street foreign-exchange strategists aren’t ready to let down their guard yet.
Exante Data LLC founder Jens Nordvig said he’s waiting to hear it from President Donald Trump himself before dismissing the possibility that the U.S. will act to forcibly weakening the dollar.
The wild-card notion of U.S. currency intervention has become a hot topic among FX analysts after Trump tweeted this month that Europe and China are playing a “big currency manipulation game.” He called on the U.S. to “MATCH, or continue being the dummies.”
Kudlow said Friday that in the past week “we had a meeting with the president and the economic principals, and we have ruled out any currency intervention.” The “steady, reliable, dependable dollar” is attracting money from all over the world, he told CNBC.
Here’s what analysts had to say:
- Alan Ruskin, Deutsche Bank AG strategist
- “To the extent that traders have feared that further modest USD gains would result in intervention, the Kudlow comments suggest that is very unlikely”
- “However, a quick EUR/USD surge through 1.10 or China letting USD/CNY push through 7 after no trade agreement, and the intervention chatter, fears will be back.”
- Steven Englander, global head of FX research at Standard Chartered Bank
- “It is less probable unless there is a precipitous USD strengthening. Trump’s more erratic moves have often been in response to some perceived injustice like China changing terms of a deal he thought was set.”
- “If the ECB or BOJ do something that weakens their currencies sharply, it is back on the table. It is just a very clumsy weapon and one that really is not powerful right now because everyone would be lined up on the other side, including maybe the Fed (by omission).”
- Jens Nordvig, Exante Data founder
- “If the White House rules it out, it is important”
- “What is a bit unclear is if Trump is fully behind this, and for how long. I would certainly not rule it out, it would be different if Trump said it clearly himself”
- Richard Franulovich, head of FX strategy for Westpac Banking Corp.
- “Trump has been jawboning the dollar and that’s been a bit of a negative on the currency. Encouragingly, Kudlow is pushing back against the idea of intervention.”
- “Trump can and will disagree: He’s already had a go at the ECB and China as currency manipulators. It could well be that he keeps saying that and likely will.”
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