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Forex - Dollar hits fresh 6-month lows as Trump woes weigh

Published 05/17/2017, 03:40 AM
© Reuters.  Dollar hits fresh 6-month lows as Trump woes weigh
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Investing.com -The U.S. dollar touched fresh six-month lows against a basket of the other major currencies on Wednesday as mounting political turmoil in the U.S. along with weak economic data weighed.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.18% at 97.92 by 07.40 GMT after touching an overnight low of 97.76, the weakest since November 9.

The index ended the previous session down 0.81%.

The dollar came under renewed selling pressure following news that U.S. President Donald Trump asked now sacked FBI Director James Comey in February to halt an investigation into former National Security Adviser Michael Flynn’s ties with Russia.

The report came amid turmoil in the White House after Trump fired Comey and then disclosed sensitive intelligence obtained from a close U.S. ally with Russia's foreign minister about an Islamic State operation.

The news raised concerns over whether Trump interfered with the judicial process and added to investor’s doubts that his administration will be able to get a divided U.S. Congress to push through his economic stimulus program.

Meanwhile, weak U.S. housing data on Tuesday added to a recent run of disappointing economic data and underlined uncertainty over the monetary policy outlook.

Odds for a June rate hike have dropped to around 64%, according to Investing.com’s Fed Rate Monitor Tool, down from more than 80% a week ago.

Against the yen, the dollar fell to one-and-a-half week lows, with USD/JPY down 0.63% at 112.39.

EUR/USD was last at 1.1096 after rising to an overnight high of 1.1122, the most since November 9.

Demand for the euro continued to be underpinned as investors shifted their attention back to the outlook for monetary policy as concerns over political risks receded.

Data on Tuesday confirmed that the euro area economy grew by 1.7% year-over-year in the first quarter, fueling speculation over how soon the European Central Bank could scale back its stimulus program.

The euro was lower against the stronger yen, with EUR/JPY down 0.53% to 124.7.

Sterling was little changed, with GBP/USD at 1.2911 ahead of the latest UK jobs report.

Economists expect the report to show that wage growth continued to lag inflation a day after data showing that UK annual inflation rose to its highest since September 2013 last month.

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