The US dollar fell away sharply last Friday after US President Donald Trump announced that US companies will have to look for alternate manufacturing locations outside of China. At the time of writing, the US dollar index is trading at around 97.71, having recovered slightly, but still weak.

The US-China trade war aggravated once again at the end of last week after China announced retaliatory tariffs on around $75 billion worth of US imports, adding up to 10% extra tariffs over tariffs that are already in place. In a tweet posted by him, Trump urged American companies “to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA. ”

Even though the dollar had previously been supported by Fed Chair Powell’s speech at the Jackson Hole symposium, which reassured the markets that the US economy did not need major stimulus measures, China’s actions and Trump’s statements have overshadowed his less than dovish statements.

Will Trump finally have his way with the Fed and convince them into lowering interest rates further now?