Rickards noted that during the campaign Trump vowed to label China a currency manipulator on “day one,” but the administration has already said it won’t apply the label. Additionally, Rickards pointed to candidate Trump’s accusation that Germany was a currency manipulator even though the country doesn’t have its own currency and instead uses the euro.
“He didn’t do any of the things he said he would,” Rickards noted. “I think it’s important to understand that Trump can change his mind in a heartbeat. He probably will. He thinks it’s an appealing thing to say. I wouldn’t read too much into it.”
Rickards added that he expected Trump to tap “hard money” advocates to the Federal Reserve soon and that the U.S. central bank would hike interest rates in June, both of which were likely to push up the dollar over the next few months.
Rickards wasn’t alone in scepticism that the Trump-inspired dollar weakness would evaporate quickly.
“Will the real Donald Trump stand up?” asked Lim Say Boon, chief investment officer at DBS Bank, in a note Thursday, pointing to similar Trump policy reversals as Rickards. “You cannot invest on President Trump’s quirks and quips. He could just as well say something else tomorrow.”
Lim noted that the dollar had already been vulnerable from safe haven buying in the yen, recent U.S. data disappointments and falling U.S. Treasury yields.
“The president’s comments do matter to the dollar, but only in the very short term. Eventually, it’s not what he says but what he does that really matters. And the markets would know he says a lot of stuff – a lot of contradictory stuff. So this will pass,” Lim said.
Lim pointed to a number of bullish expectations for the dollar, noting that Fed will still be hiking rates and was planning to start shrinking its balance sheet.
“Any one of Donald Trump’s promised policies — tax cuts, offshore corporate profit repatriation, a border adjustment tax — would be bullish for the dollar,” he said. Still, he added, “Trump’s policy flip-flops will keep markets off balance.”
—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
