Dollar, Treasury yields, stocks fall on Trump currency comments

Wed Apr 12, 2017 6:40pm EDT
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By Sinead Carew

NEW YORK (Reuters) - The U.S. dollar turned lower along with Treasury yields and stocks on Wednesday after U.S. President Donald Trump said the dollar is getting too strong and that he would prefer the Federal Reserve keep interest rates low.

Trump, in an interview with the Wall Street Journal, also said he would not label China a currency manipulator.

"The market had a big reaction, but I think it was an overreaction because (Trump) may just be hedging his bets by making sure that the American public realizes he’s not backing down on trade. It’s just that he may not think now is the right time to brand China a currency manipulator," said Kathy Lien, managing director, at BK Asset Management in New York.

"The dollar’s already under pressure, so I think any excuse for further pressure is likely to bring the greenback even lower.”

The U.S. dollar index .DXY, which measures the greenback against a basket of six other major currencies, was down 0.5 percent at its lowest since late March.

The dollar was down 0.4 percent against the yen JPY=, which is a favorite in uncertain times due to Japan's position as the world's largest creditor nation. The dollar fell 1.2 percent against the yen on Tuesday.

U.S. Treasury yields fell, with benchmark yields hitting a near five-month low due to Trump's comments favoring low interest rates. Benchmark 10-year Treasury yields US10YT=RR were 3 basis points lower at 2.268 percent after hitting 2.259 percent, which was the lowest since Nov. 17.

The Dow Jones Industrial Average .DJI fell 59.44 points, or 0.29 percent, to end at 20,591.86, the S&P 500 .SPX lost 8.85 points, or 0.38 percent, to 2,344.93 and the Nasdaq Composite .IXIC dropped 30.61 points, or 0.52 percent, to 5,836.16.   Continued...

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 29, 2017. REUTERS/Brendan McDermid