The dollar slid to a three-year low against a basket of major peers on Wednesday after the U.S. Treasury secretary said he welcomed weakness in the currency, as investors worried about President Donald Trump's protectionist agenda.
In a break with the traditional strong dollar mantra, Treasury Secretary Steven Mnuchin said the weaker dollar was positive for American trade. He was speaking at the World Economic Forum in Davos on the eve of Trump's arrival at the Swiss resort.
Mnuchin's comments provided a fresh trigger for selling of the dollar, which has been on the back foot for months on the view that the U.S. Federal Reserve is no longer the only game in town when it comes to tighter monetary policy, as growth in other regions - in Europe in particular - picks up speed.
"The Mnuchin comments have helped feed it (the weaker dollar) a little bit, but they certainly didn't get the move going in the first place," said BMO Capital Markets currency strategist Stephen Gallo, in London.
"He gave the green light for benign neglect of the currency, in the short run. It's going down for a number of fundamental reasons and he's saying he's not going to stop it."