The dollar and Trump: A currency safe haven is feeling less safe

Since the beginning of the year, the dollar has surrendered nearly 8 percent against a basket of major currencies.

LONDON — It is the closest thing to a certainty in the global economy. When trouble flares and anxiety mounts, people who manage money traditionally entrust it to a seemingly indomitable refuge, the U.S. dollar.

Yet on Wednesday, in the hours after President Donald Trump’s threat to unleash “fire and fury” on North Korea if it continued to menace the United States, global investors sold the dollar. The same dynamic played out in June, as Saudi Arabia and other Arab nations imposed an embargo on Qatar, delivering a fraught crisis to the oil-rich Persian Gulf. And the dollar dipped in July after President Vladimir Putin of Russia expelled 755 U.S. diplomats, ratcheting up tensions between the two nuclear powers.

Since the beginning of the year, the dollar has surrendered nearly 8 percent against a basket of major currencies.

The dollar remains the dominant instrument for global trade, a role it is unlikely to surrender anytime soon. Yet those who trade in currencies see tentative signs that the dollar may be losing some status as markets grapple with the unorthodox actions of the man leading the country printing the money.

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Trump’s presidency has been so full of departures from the norms of international relations that uncertainty has seeped into the calculation of America’s plans. That has subjected the dollar to additional skepticism, enhancing the fundamental factors pulling it down, from worries about the strength of the U.S. economy to improved fortunes in Europe and Asia.

The dollar has in some sense become an international medium of expression about the U.S. political environment. Its value offers a gauge of sentiment for Trump’s prospects in achieving his economic goals, as well as worries about his potentially impulsive declarations.

“At the margin, investors may be a little more cautious in treating the dollar as safe haven,” said Jeremy Cook, chief economist at World First, a London-based company that handles foreign exchange transactions. “Certainly, the sentiment toward the viability of the Trump administration has not helped. There’s the risk that at 3 a.m., Trump tweets something and the dollar gets hit.”

Before Trump was sworn in, many investors were buying into the so-called Trump trade, a bet that the…

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