Mnuchin: 'People have misinterpreted some of my comments'

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The U.S. currency traded in a lower ¥109 zone Friday in Tokyo.

The Canadian dollar retreated from a four-month high against the U.S. dollar on Thursday after comments from U.S. President Donald Trump boosted the greenback against most major currencies.

"Ultimately, I want to see a strong dollar", Trump said, sparking a rally for the USA currency, which had hit a three-year low against the euro earlier in the day, regained some ground after Trump spoke.

"Obviously a weaker dollar is good for us as it relates to trade and opportunities", Mnuchin told a press briefing.

Trump's comments roiled a market where investors are already on edge as Mnuchin and Draghi engaged in public discussions of currency levels.

Treasury Secretary Steven Mnuchin argued that his dollar-weakening comments Wednesday were "consistent" with the U.S.'s long-standing exchange-rate policy, and that he isn't concerned by short-term fluctuations in the greenback.

Gold rode a weak dollar to yearly highs earlier in the weak, but dovish comments from central bankers outside the United States have put a floor under the dollar.

A lower currency makes USA products more competitive in global markets, though it does have the potential to stoke inflation by pushing up import costs.

"For whatever reason, financial markets care what the Treasury secretary says about the dollar", said David Wessel, director of the Hutchins Center for Fiscal and Monetary Policy at the Brookings Institution. "I mean, first of all, we've had very, very good discussions".

The Commerce Department said the USA economy grew 2.6 percent in the fourth quarter. In the long term, he said "we fundamentally believe in the strength of the dollar".

In the wake of the president's remarks, the dollar trimmed its losses against other major currencies. Oil, which had hit fresh three-year highs, finished NY trading down slightly, while futures fell some 0.5% in early Asian trading.

The euro climbed 0.75% to $1.2489, while sterling added 0.86% to $1.4260 and the yen gained 0.43% to Y108.94. [US chief economist Gary] Cohn perhaps had the most accurate statement when he said that'the market is setting the value of the dollar', which of course implies that the government isn't setting it.

European Central Bank (ECB) president Mario Draghi has since criticised the USA for "jawboning" the greenback.

"Unless oil prices reach a level that drive fresh investment in the oil sands sector, the loonie's rise will be mostly reflective of the USA dollar's cyclical downtrend".

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