Politics Continue to Damage Appeal of US Dollar

The US dollar continued to fall today as controversies surrounding US President Donald Trump made the currency unappealing to investors, making it erase all gains caused by optimism about Trump’s presidency and his planned fiscal reforms back when he was elected. The greenback was especially vulnerable against safe haven currencies like the Swiss franc and the Japanese yen.

Markets continued to be riled by accusations of Trump leaking sensitive information to Russia. It will be hard for Trump’s administration to implement the planned reforms considering all the efforts to extinguish scandals and controversies. And of course, all the scandals do not encourage politicians to support President’s ideas in the first place.

All the political uncertainty and turmoil made market participants question the aggressive monetary tightening plans of the Federal Reserve. Now, traders doubt that the Fed will be able to perform three interest rate hikes in total this year.

EUR/USD rallied from 1.1081 to 1.1142 as of 16:37 GMT today, trading at the highest level since the volatile session on November 9 after Trump won the election. USD/JPY dropped 1.6% from 113.10 to 111.33. USD/CHF slid from 0.9857 to 0.9802, also touching the lowest level since November 9 (0.9775) intraday.

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