Navarro already pitched Trump on the idea
In late July, White House trade adviser Peter Navarro presented President Donald Trump with ideas on how to devalue the US dollar. Trump quickly shot him down and dismissed the idea, according to Politico.
One person in the room said Navarro had barely begun his presentation before getting "slaughtered" by Trump. A second source briefed on the meeting confirmed this account.
However just a week later it was Navarro who was Trump's lone cabinet supporter in his decision to impose a fresh round of tariffs on China. Maybe his voice is growing louder.
The market believes weakening the US dollar isn't really on the table; mostly because it's a very bad idea. However imposing tariffs just as negotiations restarted haven't exactly been good news for the US or global economy. Trump plays by his own rules and we might be underestimating the risk of some kind of action on the dollar. His comments today are troubling.
Trump right now appears to believe that pressuring the Fed to cut rates will help the dollar. He's likely mistaken. The Fed isn't going to cut to zero unless the economy begins to unravel. And if the economy does unravel, the the dollar will get a huge safe-haven bid that swaps the effect of any rate cut.
We're not at the point of no return yet but I will be closely watching the dollar. Take any measure of it -- I use the Bloomberg dollar index here -- and you can see how it's been in a narrow range for 18 months. At some point that's going to break and if it's to the upside, then all bets are off. I can't imagine it will get to 1275 before Trump pulls the trigger.
Update: Now there is this, which suggests Trump did 'slaughter' anyone.
