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The dollar is still drooping, sinking now to its weakest spot since three days after the US presidential election, while gold is basking in the glow of general investor nervousness.

“I think the constant barrage from the Trump administration is wearing out dollar bulls,” says Kit Juckes, strategist at Société Générale.

Gold was trading over $1220 on Thursday for the first time since November, while the dollar index lost 0.4 per cent on the day to trade below 99.3, its lowest level since November 11.

In a widely expected move, the Fed yesterday made no changes to interest rates, leaving the federal funds target range at 0.5 to 0.75 per cent. But it gave no strong indications of the timing of its next move, with the outcome of Republican talks over cutting taxes and boosting infrastructure remaining an uncertainty.

Three rate rises this year are looking less likely, with the odds of more than two falling again yesterday to just over a third, according to calculations on federal funds futures.

From Lena Komileva at g+economics:

While the FOMC noted that economic conditions and sentiment have notably improved, there is no confidence on how the Trump administration’s policies will affect the economy. Hence, the direction of policy remains towards stimulus normalisation, but the timing is more uncertain as policy officials opt for a risk-based approach in the face of longer-term uncertainty.

Comments from Mr Trump and his administration have also been moving the dollar. The dollar index slipped earlier this week after Peter Navarro, head of Mr Trump’s national trade council, criticised Germany for using a weak euro to gain trade advantages over the US.

This was followed up by remarks by Mr Trump suggesting Japan was manipulating the yen, drawing a swift rebuke from prime minister Shinzo Abe.

Copyright The Financial Times Limited 2017. All rights reserved.
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