The dollar is slipping on Thursday morning, continuing a trend it started Wednesday after the Federal Reserve said again that it will slowly raise interest rates. The Fed gave no indication of when the next hike will come.
The greenback fell to its lowest level since the middle of November against a basket of other currencies. The Fed appears to be waiting to get a better view of what President Donald Trump's policies will mean for the economy.
Billionaire investor Bill Gross, who manages the $1.8 billion Janus Global Unconstrained Bond Fund, is concerned that the strong dollar and undervalued peso could negatively impact the U.S. and global economy.
"I think the dollar is a concern," Gross said in an interview with BloombergTV on Wednesday. "The dollar is the global currency, basically, and to the extent that the dollar strengthens, not only are U.S. companies affected to the negative, but the global marketplace and global countries are affected too, because they have trillions of dollars of U.S.-denominated debt."
"A strong dollar is basically a threat to global growth and to U.S. growth," Gross continued.
Thursday morning's "Bloomberg Daybreak: Americas" hosted a pair of analysts that were discussing the strong dollar, Gross' statements, the economy and more.
"There's no doubt that if what you're talking about is fiscal stimulus, hawkish on monetary policy, tariffs and border adjustment -- every one of those is going to help strengthen the dollar. And a stronger dollar is going to raise our trade deficit and create a challenge for manufacturing. So there's a real tension in the set of things that the president's economic policy has," Peterson Institute senior fellow Jason Furman said.
Trump's economic vison includes creating a "dynamic booming economy" that will see 25 million new jobs over the next decade. He also says he wants to reform policies with a pro-growth tax plan, create a new modern regulatory framework and implement an America-first trade policy.
Bloomberg anchor David Gura pointed out that we have never seen a fiscal stimulus tax on the end of a business cycle. He asked Allianz Global Investors CEO Andreas Utermann what that would mean.
"Well I think it would mean a continuation of the cycle, clearly. It would mean, I agree with Jason, it would be a much stronger dollar still. Really since the great financial crisis, the currency moves have really responded to interest rate differentials," Utermann said.
Central banks that went into quantitative easing first had the weaker currencies, and now those coming out first are having stronger currencies, Utermann explained. He says this will be the case for the dollar as well.
As long as the Fed remains independent and can pursue policy without political considerations, then Utermann sees a continuation in the stronger dollar.