Comments from the Trump administration that smack of protectionism stung the dollar Tuesday, but strategists say they are not ready to change their outlook for a stronger greenback based on just words.
Peter Navarro, top trade advisor to President Donald Trump, told the Financial Times that Germany is using a "grossly undervalued" currency to gain an advantage over its trade partners. He made similar comments on CNBC last week. The President, in a meeting with pharmaceutical companies, said Tuesday that companies are outsourcing their manufacturing operations because of currency devaluation by other countries.
"Ultimately it's more about watch what they do, not what they say really," Alan Ruskin, head of G-10 foreign exchange strategy at Deutsche Bank, said of the Trump administration.
Ruskin said the Federal Reserve's policy is still the most important driver of the dollar, and the fact it is raising rates while other central banks are still easing is going to make the dollar stronger. The only way the administration could change that is if it takes policy steps that forces the Fed to alter its policy, Ruskin said.