The incoming president sent dollar bulls scrambling to sell earlier this week when he called the greenback "too strong."
Testifying at his confirmation hearing for Treasury Secretary, Steven Mnuchin says Trump was talking about the "short-term" when he made those comments, and that the "long-term strength of the dollar" is of great import.
The dollar's been bouncing for a couple of days, and continues this session, up 0.55%.
President-elect Donald Trump's comments suggesting the greenback is "too strong" sent the dollar index tumbling to its lowest level in more than a month, but the currency recovered some of that weakness in trading overnight.
Adding to the dollar's weakness was sterling strength, which surged 3% - the biggest one day-climb since 1998 - following Theresa May's Brexit speech in which she pledged to walk away from negotiations if Britain didn't get a good deal from Brussels.
After a roaring end to 2016, the greenback continues to struggle in the new year, with the dollar index off another 0.6% this morning. Not helping is a weekend interview with the WSJ in which the president-elect called the dollar "too strong."
Strongest vs. the dollar today is the U.K. pound even as Prime Minister Theresa May calls for a clean break with the EU.
The dollar's decline is boosting the bid for the roughed-up precious metals, with both gold and silver higher by 1.25% for the session. At $1,211 per ounce, gold is at its strongest level since late November.
Stocks are holding up fine, but other legs of the post-election moves in markets are continuing to unwind.
Among them is king dollar (UUP, UDN) - the dollar index is lower by another 0.8% this morning, and now down about 3% for the year. Excuses? Have your pick, but currently making the rounds was yesterday's Trump press conference at which no details on policy stimulus were offered. Up nearly or even more than 1% vs. the greenback this morning are the yen (NYSEARCA:FXY), loonie (NYSEARCA:FXC), euro (NYSEARCA:FXE), pound (NYSEARCA:FXB), aussie (NYSEARCA:FXA) and Swiss franc (NYSEARCA:FXF).
Interest rates continue to back up as well. The 10-year yield peaked near 2.60% in mid-December, trickled lower into year-end, and this morning is down another five basis points to 2.33%. TLT +0.6%, TBT -1.2% premarket
Then there's gold (NYSEARCA:GLD) - it stood at about $1,300 per ounce at election time and plunged to as low as about $1,135 in the weeks following. It's higher by 0.7% this morning to $1,205 per ounce - now up about $50 per ounce for the year.
King dollar had stumbled out of the block this year, but it's headed higher as this morning's roughly inline employment report allayed any growth worries or idea the Fed might cool its hawkish attitude.
The headline jobs number of 156K was slightly below expectations, but prior months' gains were revised higher.
UUP is up 0.5% premarket, with the euro (NYSEARCA:FXE), pound (NYSEARCA:FXB), yen (NYSEARCA:FXY), Swiss franc (NYSEARCA:FXF), and aussie (NYSEARCA:FXA) all lower vs. the greenback.
Gold had managed to put together a rally over the past few sessions, but it's moved lower since the number, now down 0.7% to $1,173 per ounce. GLD -0.7%
The dollar index kicked off the new year by making its biggest one day gain in over two weeks, rising 0.4% to 102.63, continuing the 2016 momentum that saw it post a fourth consecutive annual rise for the first time in over 30 years.
Most analysts expect the greenback to continue strengthening in 2017, because the economy appears likely to withstand multiple Fed rate hikes, making it more attractive to hold dollar-denominated assets.
The dollar continues to make gains after Janet Yellen told University of Baltimore graduates they are entering the strongest U.S. jobs market in a decade.
Although she stayed away from any mention of monetary policy, the Fed Chair said wages are picking up and there are more job openings, but cautioned that the economy still faces weak productivity and low growth.
The yen has plunged 11% vs. the dollar since Pres.-elect Trump's election victory last month, surpassing the Mexican peso's 10% slide to become the worst performing major currency during the period.
The weaker yen will make Japan’s exports more competitive and could boost growth, and the Nikkei index has gained for eight straight days, but bond prices have been under pressure amid a global debt selloff.
In China, fears that a rising dollar will destabilize trading in the yuan has send the currency to its lowest against the dollar in more than eight years and raising concerns that outflows could increase.