"Ultimately, I want to see a strong dollar", Trump said, sparking a rally for the U.S. currency, which had hit a three-year low against the euro earlier in the day, regained some ground after Trump spoke. A weaker dollar makes USA products more competitive in global markets. The pound traded above $1.41 after the release, which also showed wage growth of 2.4%.
"The most recent appreciation in the euro against the dollar largely reflects dollar weakness related to political risk in the USA", said Danielle Haralambous, UK analyst at the Economist Intelligence Unit.
"It is perhaps slightly different from previous Treasury secretaries" who have advocated for a strong dollar, he said, adding that he supports free and floating currencies.
Meanwhile, reacting on the Mnuchin's remarks, White House spokeswoman Sarah Sanders said at a daily briefing in Washington, "We believe in a free-floating currency".
Trump is due later at the World Economic Forum and is expected to argue that his policies, created to boost the US economy, should be welcomed by the worldwide business community.
The remarks were seen by markets as departing from traditional U.S. currency policy and elicited thinly veiled warnings from European finance ministers, as U.S. President Donald Trump arrived in Davos to promote his "America First" agenda.
OCBC said: "With the inexorable slide in the USA dollar, one lingering question on investors' minds is why the Fed policy normalisation and President Trump's trade protectionism didn't lend much near-term support". "But America First does mean working with the rest of the world", Mnuchin said.
Ross said US trade actions were provoked by "inappropriate behavior on the part of our trading counterparties".
He also denied that America is trying to launch a trade war, insisting that the United States doesn't want less trade, it wants "fair trade".
"I really hope that Secretary Mnuchin has a chance to clarify exactly what he said", Lagarde said in Bloomberg TV interview with Francine Lacqua and Tom Keene at the World Economic Forum's annual meeting in Davos, Switzerland.
Australian dollar returns have been hindered by the strength in local currency, which continues to hold above USD $0.80, with gold and silver in AUD pushing up toward (but not yet reaching) $1700oz and $22oz respectively.
South of the border, US stocks wobbled and finished mostly lower on Wall Street as technology companies including chipmakers dropped.
Still, Mnuchin said that the USA was open to new trade agreements.More news: Trump Rejects Report FBI's Wray Threatened to Resign