Update: Politico reports that Trump rejected Navarro's options for devaluing the dollar, with CNBC's Kayla Tausche reporting that Trump convened a cabinet-level trade meeting on Tuesday to discuss ideas to weaken dollar - including capital controls and active "jawboning" by officials on TV - however, the meeting broke with a decision not to intervene, and Navarro "didn't get through 10% of his presentation," per one official. But, as Tausche adds, "anti-interventionists worry they can't keep Navarro and Pres. Trump at bay."
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In the past month there has been extensive speculation whether the Trump admin, as part of its desire to devalue the dollar against other currencies whose central banks are engaging in aggressive devaluation campaigns of their own, would pursue currency intervention as first Bank of America suggested last month, only to be followed by virtually every other research analyst, and culminating with a take from Standar Chartered's Steven Englander who said that "The US Can Intervene To Weaken The Dollar... But What Would It Buy?"
To be sure there was ample reason for such speculation, not the least as a result of Trump's own July 3 tweet in which he said that "China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH..."
China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!— Donald J. Trump (@realDonaldTrump) July 3, 2019
Fast forward to today, when it appears that the Trump administration has had some time to reconsider if it wants to engage in outright currency war against every other developed (and developing) nation, and moments ago speaking on CNBC, Trump's chief advisor Larry Kudlow said that currency intervention is off the table:
“We have as a matter of policy ruled out currency intervention,” Kudlow said.
Kudlow also said that he does not agree that Trump "wants a weak dollar" and instead is concerned about foreign countries devaluing their own currencies.
In kneejerk reaction, the Bloomberg Dollar index, which had been depressed for the past few weeks amid speculation that the White House may in fact surprise markets with a new Plaza Accord, surged and has now erased all of its power FOMC losses, as the growing army of dollar shorts is once again crushed.
With Kudlow's blessing, the Bloomberg Dollar Spot index is now on track for its best weekly gain since early February, flattening its DM and EM competition... much to Trump's chagrin.