USD Touches 2.5 Year Low Versus Euro After White House Uncertainty

The U.S. dollar hit a more than 2-1/2-year low against the euro on Monday on month-end portfolio adjustments and uncertainty over the U.S. political outlook after the departure of White House communications director Anthony Scaramucci.

The euro hit more than 2-1/2-year peaks against the dollar earlier in the session on month-end buying and euro zone inflation data that kept expectations for a more hawkish European Central Bank alive. It extended gains to trade as much as 0.8 percent higher against the dollar on the day after the New York Times reported U.S. President Donald Trump had decided to remove Scaramucci.

The White House later said Scaramucci was leaving the job after little over a week. Scaramucci’s departure follows one of the rockiest weeks of Trump’s presidency in which a major legislative effort – a healthcare overhaul – failed in Congress and both his spokesman and previous chief of staff left their jobs.

The dollar index, which measures the greenback against a basket of six major currencies, hit its lowest since early May 2016 of 92.786 after the news of Scaramucci’s departure. The dollar also hit a more than six-week low against the yen of 110.22 yen.

Doubts surrounding the likelihood of Trump realizing his pro-growth agenda, including tax reform, have hurt the dollar and contributed to the dollar index’s roughly 2.9 percent decline in July. That decline would be the biggest monthly drop since March 2016.

Concerns that low U.S. inflation could lead to a more dovish Federal Reserve have also hurt the greenback.

“With the confirmation of Scaramucci´s departure, this is another blow to the administration´s credibility,” said Alfonso Esparza, senior currency analyst at Oanda in Toronto.

The euro was boosted earlier in the day as traders bought the currency as part of month-end portfolio adjustments, analysts said, and on the expectations the ECB was on track to tighten monetary policy.

via DailyMail

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.