Trump's Fed attack sees dollar dive and stocks struggle

Trump Attacks Fed Reserve Chairman For Not Acting Like A 'Cheap Money' Central Banker

"The Fed was sounding relatively hawkish when it met last month and the outlook is likely to be for another rate rise later this year and that is largely within the gold price", said Mitsubishi analyst John Butler.

Powell also told Scott, according to the lawmaker, "that the president has not weighed in with him at all on interest rates whatsoever, or on any role the Fed has".

But for now, it's sticking with its plan to raise interest rates - whether President Donald Trump likes it or not. He urged the Fed to avoid doing anything that could slow economic growth.

The New Zealand dollar climbed to a two-week peak of $0.6772 NZD=D4 after strong domestic second quarter retail sales data suggested the gross domestic product would overshoot the central bank's forecast.

This week, Trump complained in an interview with Reuters that he was "not thrilled" with Powell's Fed for raising rates.

Trump used similar language when he criticized the Fed in a July interview with CNBC.

"I'm not thrilled with his raising of interest rates, no".

The precious metal has come under pressure this year, sliding more than 12% since hitting a high of $1,365.23 in April amid USA interest rate hikes and a soaring dollar.

Stocks are at an all-time high. Some question whether Trump's trade war and the financial crises in emerging nations might so endanger the USA economy that the Fed would have to slow or suspend its rate hikes - or even consider cutting rates again.

"I doubt these comments move the needle for Powell and his colleagues, but it certainly sends a strong signal to those candidates interested in vying for one of the Fed Board's many open seats: favour easy money policy or find another job", LeBas said.

Trump has also publicly criticized Powell several times this summer and reportedly did so again Friday at a GOP fundraiser in NY, saying he thought the chairman would support "easy money".

Analysts said growing USA political uncertainty, reinforced by the criminal convictions of two of Trump's ex-advisors, would keep the dollar under pressure, despite the United States embarking on greater monetary tightening than elsewhere.

The single currency then rebounded as the United States and China agreed to hold low-level trade talks, calming market nerves and reducing demand for the safe-haven dollar.

Trump has broken from the majority of Republicans on monetary policy with his support for low interest rates to stimulate the economy.

The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. Meanwhile, President Trump appears to be putting his thumb on the scales of this delicate balancing act, if not risking tipping over the scales entirely.

The U.S. central bank has raised interest rates twice this year and is targeting two more hikes, with the next one seen in September.

Powell's speech Friday in Jackson Hole will be followed by a presentation of academic papers addressing the theme of this year's conference, "Changing Market Structure and Implementation for Monetary Policy".

The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating.

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