President Donald Trump on Friday attacked China and the European Union for keeping their currencies artificially low to gain a trade advantage, while again blasting the Federal Reserve for raising interest rates.
In a pair of tweets, Trump said "China, the European Union and others have been manipulating their currencies ... while the U.S. is raising rates while the dollar gets stronger and stronger with each passing day."
That is "taking away our big competitive edge."
After criticizing the Fed in an interview, Trump again lambasted the central bank, saying "Tightening now hurts all that we have done."
The dollar dropped against the euro as comments by U.S. President Donald Trump risked ratcheting up trade war tensions, while stocks diverged.
Artjom Hatsaturjants, research analyst at Accendo Markets, said "market sentiment soured on President Trump criticizing the Fed for hiking rates and threatening to go 'whole hog' on imposing tariffs on all $500 billion of Chinese imports to the U.S., further inflaming global trade tensions and putting at risk central bank independence".
In an interview with CNBC television broadcast Friday, Trump threatened to slap all Chinese imported goods with tariffs, risking an escalation in global trade war tactics.
"I'm ready to go 500," the Republican leader told CNBC, referring to the $505.5 billion in Chinese imports into the United States in 2017. "I'm not doing this for politics, I'm doing this to do the right thing for our country."
"We've been ripped off by China for a long time," he added.
The dollar began taking a hit on Thursday after Trump suggested that the Fed's policy of raising US interest rates was pushing up the dollar, in turn hurting American exporters.
His comments did not help to push the dollar down versus the yuan, however. Instead, the Chinese currency weakened and was expected to extend its steady decline, providing Beijing with a buffer against punitive US trade tariffs.
In excerpts of an interview with U.S. television network CNBC aired Thursday, Trump said a strong dollar "puts us at a disadvantage", adding that the Chinese yuan "has been dropping like a rock".
Those comments, plus Trump's criticism of Federal Reserve interest rate hikes, caused the dollar to fall back against other currencies, however, including the pound which rebounded from 10-month lows versus the greenback.
Fears are growing over a fierce global trade war, after Trump's imposition of hefty import taxes on steel and aluminum from the EU, Canada and Mexico, in addition to levies already on goods from China worth tens of billions of dollars that have sparked retaliatory tariffs.