US Dollar Falls on Political Scandal & Doubts About Interest Rate Hike

The US dollar fell against such rivals as the euro and the Japanese yen today due to another political scandal in the United States. Another reason for the drop were comments from a Federal Reserve official that damped interest rate hike expectations.

US President Donald Trump appeared in the center of yet another scandal, though this time not by his own fault. Leaked emails showed that his son, Donald Trump Jr., was contacted by Russian officials with an offer of incriminating evidences against Hillary Clinton, and he eagerly accepted the offer. While it was not a criminal thing to do by itself, it reinforced suspicions of Russian involvement in the US Presidential elections and increased chances of Trump’s impeachment.

Meanwhile, Fed Governor Lael Brainard was speaking today and said during the speech:

I will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target.

Her comments led to speculations that perhaps the Fed is not ready to continue monetary tightening in the near future. Now, traders wait for tomorrow’s speech of Fed Chairwoman Janet Yellen, which may confirm or contradict such view.

EUR/USD jumped from 1.1398 to 1.1470 as of 18:17 GMT today, trading near the highest level since May 2016. USD/JPY declined from 114.03 to 113.90 after rallying to 114.49 intraday. At the same time, GBP/USD declined from 1.2880 to 1.2949, retreating from the session high of 1.2927.

If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published. Required fields are marked *