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US dollar weak as political risks linger; euro up on Merkel comments
[NEW YORK] The US dollar fell to a more than six-month low against a basket of currencies on Monday, extending its losses from last week, as an uncertain US political climate and a buoyant euro weighed on the greenback.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.14 per cent to 97.005. It fell to a low of 96.797, its lowest since Nov 9, earlier in the session.
"I think it is a continuation of the move we have seen since mid-April," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"The dollar's broad declines are driven by the increasingly mixed tone to US economic data, which has led to investors questioning the extent to which the Fed will be raising rates this year. The political climate is also acting as a key headwind for the dollar."
The US dollar fell more than 2 per cent last week, logging its worst performance in more than a year, amid growing concerns over US President Donald Trump's recent firing of FBI Director James Comey, who was overseeing an investigation into possible links between the president's team and Russia.
Political turmoil in Washington has also raised worries that there could be delays in Mr Trump's efforts to implement his economic stimulus plans.
"Generally speaking, we still have a constructive view on the dollar but in light of some of the recent weakness we certainly have to contemplate how lasting could this impact from fiscal policy, or lack thereof, be for the currency markets," said Erik Nelson, currency strategist at Wells Fargo Securities in New York.
The greenback was also pressured by a rallying euro, which hit a more than six-month high against the US dollar on Monday after Germany's Angela Merkel prefaced a summit of G7 leaders later this week by saying a "too weak" currency was behind her country's massive trade surplus.
Speaking to students at a secondary school in Berlin, Ms Merkel said that Germany's huge export earnings were propelled by two factors over which the government had no influence, namely the euro's exchange rate and oil prices.
The euro was up 0.25 per cent against the US dollar at US$1.1232 after hitting a high of US$1.1263, earlier in the session.
Meanwhile, sterling slipped broadly after polls showed a narrowing lead for Britain's Prime Minister Theresa May over her opposition ahead of elections next month.