* Dlr/yen slumps to 5-mth low
* Trump says prefers low interest rates
* Trump comments raise wariness over Treasury's currency
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, April 13 The dollar recovered from a
two-week low against a broad index on Thursday, having slid
after U.S. President Donald Trump said the currency was getting
too strong and that he would prefer the Federal Reserve to keep
interest rates low.
The greenback and U.S. Treasury yields took a heavy hit
after Trump's comments to the Wall Street Journal, in which he
said the strength of the economy would hurt the dollar.
But after losing 0.6 percent on Wednesday - its biggest
one-day fall in over three weeks - the dollar recovered on
Thursday, trading up 0.3 percent on the day by 1150 GMT.
Having hit a five-month low of 108.73 in early Asian
trading, the dollar steadied at 109.14 yen.
"This is a little bit of a correction of the move we saw
overnight following the comments from Trump," said Commerzbank
currency strategist Thu Lan Nguyen, in Frankfurt. "Yes, it was
negative what he said...but it’s not a big surprise – it wasn’t
a U-turn in his rhetoric on the exchange rate so far,"
"The question is: is he able to influence monetary policy in
order to get a weaker dollar? That is still an open question."
Trump's comments broke with a long-standing practice of both
U.S. Democratic and Republican administrations refraining from
commenting on policy set by the independent Federal Reserve. It
is also unusual for a president to talk about the value of the
dollar, a subject usually left to the U.S. Treasury secretary.
The comments were seen by markets as a fresh reminder of the
president's protectionist trade rhetoric, which has been a
source of concern for dollar bulls.
"Bearing in mind the administration’s continued verbal
intervention in the FX market, we think that any near-term
rallies in the dollar could stay relatively limited, despite the
Fed raising rates at a moderate pace," said IronFX analyst
Sakis Paraskevov in Cyprus.
The dollar has shed 2 percent against the yen so far this
week, with the safe-haven Japanese currency on a bullish footing
because of a rise in geopolitical tensions.
Investors are concerned about the upcoming French
presidential election as well as possible U.S. military action
against Syria and North Korea and an escalation of tensions with
That Trump seemed unmoved by the already significant
weakening of the dollar against the yen increased nervousness
about the U.S. Treasury's semi-annual currency report due
Friday, and next week's U.S.-Japan bilateral dialogue.
The euro fell 0.4 percent to $1.0626.
The dollar was on track for its third straight day of losses
against China's yuan, after rising to a one-month high
at the start of the week.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by
Hugh Lawson and Susan Thomas)