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Euro spikes after Trump's trade adviser says Germany is using 'grossly undervalued' currency

Germany is using a "grossly undervalued" euro to gain advantage over the United States and its own European Union partners, Donald Trump's top trade adviser told the Financial Times, echoing a sentiment he gave last week on CNBC.

Peter Navarro, the head of Trump's new National Trade Council, told the newspaper that the euro was like an "implicit Deutsche Mark" whose low valuation gave Germany a competitive advantage over its main partners.

Navarro said that Germany was one of the main hurdles to a U.S.-EU trade deal and that talks over a Transatlantic Trade and Investment Partnership (TTIP) were dead, the newspaper reported.

Peter Navarro, senior economic advisor to 2016 Republican Presidential Nominee Donald Trump last September.
Andrew Harrer | Bloomberg | Getty Images
Peter Navarro, senior economic advisor to 2016 Republican Presidential Nominee Donald Trump last September.

"A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the U.S. with an 'implicit Deutsche Mark' that is grossly undervalued," the FT quoted Navarro as saying on Tuesday.

"The German structural imbalance in trade with the rest of the EU and the U.S. underscores the economic heterogeneity within the EU — ergo, this is a multilateral deal in bilateral dress."

The euro climbed after the comments, reaching a five-day high of $1.0764 and knocking the dollar index down 0.4 percent to below 100 for the first time in five days.

"Euro/dollar received a significant push high in the European session by the head of the U.S. National Trade Council, Peter Navarro, who accused Germany of being a currency manipulator," said Commonwealth Bank currency strategist Adam Myers.

The euro fell 23 percent against the dollar in the three years to December, and earlier this month traded as low as $1.0339, its lowest in 14 years.

—Reuters contributed to this report.