By Sinead Carew and Jamie McGeever
NEW YORK/LONDON (Reuters) - U.S. President Donald Trump and a top economics adviser on Tuesday unleashed a barrage of criticism against Germany, Japan and China, saying the three key U.S. trading partners were engaged in devaluing their currencies to the harm of American companies and consumers.
The comments from Trump at the end of a White House meeting with pharmaceutical executives, as well as from trade adviser Peter Navarro in a newspaper interview, were the starkest indication yet that the first-term Republican president is prepared to jettison two decades of "strong dollar" policies advocated by predecessors dating back to the Clinton administration.
The criticism also signals a weakening of the U.S. commitment to an agreement among the financial leaders of the world's top 20 economies, struck after the 2008 financial crisis, that countries would not pursue policies to target exchange rates for competitive purposes.
"Those comments, talking about somebody else's currency, talking about valuation, almost seem like they're criticizing the construction of the euro zone which is a whole other issue," said Greg Anderson, Global head of FX strategy for BMO Capital Markets in New York. "I'm sure a lot of people have those thoughts. In the gentleman's agreement, as an official you don't mention those thoughts."
Trump and Navarro's remarks are just the latest to deepen a growing unease in financial markets about the outlook for global trade in the Trump era and sent the U.S. dollar into a tailspin against the euro and yen on Tuesday.
A broad measure of the dollar against the currencies of key trading partners sank by 0.85 percent to cap a 2.6 percent decline in January, its weakest monthly showing since last March.
The market convulsions began when Navarro, who heads Trump's newly created National Trade Council, told the Financial Times newspaper that the euro was like an "implicit Deutsche Mark" whose low valuation gave Germany an edge over the United States and its European Union partners.
That propelled the euro up about 0.5 percent against the U.S. dollar and drew a rebuff from German Chancellor Angela Merkel, who said the country respects the independence of the European Central Bank. Some blame the ECB for engineering an ultra-loose monetary policy in order to keep the trading bloc's common currency weak and stimulate economic growth in the euro-zone.
"Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did before the euro existed," Merkel told a news conference in Stockholm with Swedish Prime Minister StefanLofven.