U.S. Markets

Trump jabs Fed, calls China's currency move 'major violation'

FILE PHOTO: U.S. President Donald Trump speaks on U.S. and China trade negotiations at the Governors' Ball, in the State Dining Room of the White House, in Washington, U.S., February 24, 2019. REUTERS/Al Drago/File Photo

WASHINGTON (Reuters) - U.S. President Donald Trump slammed China’s decision to let its yuan currency breach the key seven-per-dollar level for the first time in more than a decade, calling it “a major violation” and jabbing the U.S. central bank.

“China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!” Trump tweeted.

China’s action signals it may be willing to tolerate more currency weakness, which could further inflame an ongoing trade conflict with the United States that sparked anew last week after Trump said he would impose additional tariffs on Chinese imports.

Trump has also criticized the Fed for not making a big enough cut in U.S. interest rates last week in response to monetary policy moves taken by China and Europe, and has ramped up pressure on the U.S. central bank to act.

The dollar has gained 2.2 percent against the yuan since Trump’s pledge on Thursday to put a 10 percent tax on $300 billion of Chinese imports, the U.S. currency’s biggest move in almost exactly four years.

The yuan's move sent chills through global financial markets as investors saw few options for a de-escalation of trade tensions between the United States and China. On Wall Street, coming off its largest weekly loss of the year, S&P 500 e-mini futures ESv1 were down 1.5% in a sign that further losses were in store when the market opens later this morning.

Reporting by Susan Heavey and Dan Burns; Editing by Steve Orlofsky and Paul Simao