A handful of weeks ago, President Trump decried the currency manipulation of Europe and China that was producing a strong dollar. Six months ago, Treasury Secretary Mnuchin was understood to have talked the dollar down. It seemed reasonable then to be on guard for another headline bomb as the dollar was surging to new highs against a wide array of currencies of developed as well as emerging market economies.

Sure enough, the tweet came, but it seemed like a complete about-face. Trump wrote," Money is pouring into our cherished DOLLAR like rarely before." Shortly thereafter economic adviser "King Dollar Kudlow" recognized that the dollar's strength reflected confidence in US policies. What to make of this?

At the risk of being too cynical, can we suggest that perhaps the President did not write this tweet? It seems out of character

for him to qualify his superlative "like rarely before." The US President does not do that. The qualification recognizes that we have seen dollar rallies in the past, and the last time Kudlow was in the White House, Reagan was President. The policy mix was similar (looser fiscal policy and tighter monetary policy), and the dollar had its first post-Bretton Woods rally. The implication of this is that less supportive dollar comments may still be forthcoming, perhaps as some businesses begin cautioning that the strong dollar is eroding their overseas profits and is boilerplate stuff for business journalists.

The euro is nudging higher against the dollar for the third consecutive session, but it struggles to sustain upticks above $1.1400 and sellers seems to be lurking ahead of the week's high a little above $1.1430.Given the dearth of fresh news, the option expires may influence the price action. There are options in the $1.1400-$1.1405 for 1.56 bln euros that will be cut today. There is are a little more than 550 mln euros at a $1.1425 strike, and 1.1 bln euros struck at $1.1450 that expire today.

The dollar cannot make much headway against the yen. Like yesterday, it remains within Wednesday's range (roughly JPY110.45-JPY111.45). There is a JPY110.50 option for $2.2 bln that will be cut today which is particularly relevant. A $1.2 bln option stuck at JPY110 seems too far away as is the $750 mln in options struck in at PY110.80-JPY110.90.

Sterling remains pinned near its lows and remains within about half a cent band either side of $1.27. Outside of a brief dip in early Asia, sterling has held above $1.27 today, but there seems to be little appetite to drive it higher. Given the technical condition, we would not be surprised to see some limited range extension to the upside.

The US dollar has been meeting offers this week around CAD1.3170.After the US dollar rallied from CAD1.3050 to CAD1.3175 in the middle of the week, it has been consolidating in the upper end of that range. A $570 mln option is struck at CAD1.3170 that expires today. Also, CAD1.3145-CAD1.3150 hold $1.71 bln in an option that expires today. Canada reports July CPI figures today. A 0.1% increase, the same as in June, would keep the year-over-year pace steady at 2.5%. The common core measure may tick up to 2.0%. A second rate hike this year remains likely in Q4.

The US economic calendar is light, featuring the Leading Economic Indicator, which is expected to rise by about 0.4% after a 0.5% rise in June. The preliminary August University of Michigan consumer sentiment survey will also be released, and the inflation expectations will be watched (and compared with July's 2.9% one-year outlook and 2.4% for the longer-term).