Dollar erases almost its entire 'Trump bump'
The dollar slumped against its major currency rivals Tuesday, after reports President Donald Trump shared classified information with top Russian officials at a meeting last week.
The ICE Dollar Index fell 0.6% to 98.3430, trading around its lowest level since Nov. 9, just a day after Trump won the U.S. presidential election.
Market reaction to a pair of mixed economic reports releases was largely muted.
The pace of home construction eased in April (http://www.marketwatch.com/story/housing-starts-ease-to-117-million-rate-in-april-after-strong-first-quarter-2017-05-16)as builders took a breather after a strong start to the year. Meanwhile, industrial production in April (http://www.marketwatch.com/story/us-industrial-output-jumps-in-april-at-fastest-rate-in-more-than-three-years-2017-05-16)grew at the fastest monthly rate in more than three years, on the back of broad-based gains in the manufacturing sector.
Analysts said recent weakness in the dollar was partially in response to disappointing economic data.
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.
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 lackluster economic reports and increasing doubts that Trump will be able to push through his pro-growth agenda has yanked the dollar lower in recent months.
Against the yen , the dollar fell to Yen113., from Yen113.79 on Monday.
The euro jumped 0.9% to $1.1073 on Tuesday, up from $1.0975 late Monday in New York, to reach its highest level since early November. Tuesday's rally was partly due to dollar weakness and partly because of optimism over the relationship between new French President Emmanuel Macron and German Chancellor Angela 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.
Analysts at Brother Brothers Harriman in a note to clients wrote that as of a week ago, speculators in the futures market are net long, or bullish on, euros for the first time in three years.
"The intraday technicals warn that the euro buying may have exhausted itself for the time being," the notes said.
In other currencies, the pound erased an earlier gain after U.K. inflation data showed consumer prices rose 2.7% in April, more than the 2.5% expected. Sterling bought $1.2899, compared with $1.2895 late Monday in New York.
(END) Dow Jones Newswires
May 16, 2017 09:58 ET (13:58 GMT)