Dollar erases almost its entire 'Trump bump'
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The dollar slumped against all other major currencies on Tuesday, after reports President Donald Trump shared classified information with top Russian officials at a meeting last week.
The ICE Dollar Index fell 0.3% to 96.540, trading around its lowest level since Nov. 10, just a few days after Trump won the U.S. presidential election. Against the yen , the dollar fell to Yen113.58, from Yen113.79 on Monday.
The greenback is "coming under increasing corrective pressure amidst data disappointment and more concern over Trump," said Richard Perry, market analyst at Hantec Markets, in a note.
The renewed uncertainty over the president came after U.S. officials said Trump shared sensitive intelligence about ISIS (http://www.marketwatch.com/story/trump-revealed-sensitive-intel-to-russians-us-officials-say-2017-05-15) with Russian Foreign Minister Sergei Lavrov and Russian Ambassador Sergei Kislyak at a meeting in the Oval Office last week. The meeting took place the day after Trump fired Federal Bureau of Investigation Director James Comey, who had been leading an investigation into possible ties between the president and Russia.
"Denials have been swift, but it all feeds into the narrative of how maverick Trump runs his presidency, something that does not instill too much confidence," Perry added.
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The buck rallied after the U.S. election, with the ICE index trading at a 14-year high on hopes the new administration would boost the country's economy and lead to higher interest rates. However, recent sluggish data and increasing doubts that Trump will be able to push through his growth agenda has yanked the dollar lower in recent months.
The euro jumped to $1.1041 on Tuesday, up from $1.0975 late Monday in New York, to reach its highest level since November. The rally was partly due to dollar weakness and partly because of optimism over the relationship between new French President Emmanuel Macron and German Chancellor Angele Merkel.
After a meeting on Monday, the two leaders signaled a move to strengthen the eurozone and possibly change some of the existing EU treaties.
"The euro has upside potential from here, but for now we would regard a higher euro as a cross trade," analysts at Morgan Stanley said in a note.
"[The euro-dollar] may still have problems overcoming the 1.1030 resistance, should our view of a firmer dollar on the back of higher oil prices and the better [capital expenditure] outlook materialize," they added.
In other currencies, the pound held to firm gains after U.K. inflation data showed consumer prices rose 2.7% in April, more than the 2.5% expected. Sterling bought $1.2931, compared with $1.2895 late Monday in New York.
(END) Dow Jones Newswires
May 16, 2017 04:59 ET (08:59 GMT)