USD: Bessent's View on USD Correction May Endorse Further Weakness

Treasury Secretary Bessent's view on the dollar's recent market moves is interesting here - notes that "a lot" was priced in after Trump's election, so it's natural to see an adjustment, and is natural that other currencies could do well (likely referring to the EUR here, as he also says "could see surprise upside growth in Europe").

• Bessent likely sees this as infitting with the "strong dollar" policy that he's argued in favour of, stressing for the dollar to preserve the reserve currency status.
• It's unlikely the administration have any issue with the pullback in the dollar - and may relieve outside calls and speculation for any form of "Mar-a-Lago Accord" that would support US manufacturing by coordination with foreign countries (coerced via tariffs, security assurances, market access or a combination of all three) or via an interventionist sovereign wealth fund.
• That said, dollar weakness would likely have to go further, or last longer, to support any resurgence in US manufacturing across this Presidential term. As such, don't expect the admin's language toward the dollar, the economy or market volatility to shift materially - even if we see a further leg lower in the USD Index - even as we have closed the election gap and remain well over 3% above last year's lows.