The US dollar struggled to rise against the euro and other major currencies on Tuesday as traders continued to be concerned about political instability in the United States. The greenback was met by additional resistance as it attempted to move higher today due to a drop in new home sales and a disappointing reading for an index that tracks manufacturing activity.
Concerns about possible delays in Donald Trumpâs plans to stimulate the economy continued to linger today in the wake of a controversy that emerged after the president fired Federal Bureau of Investigation Director James Comey. Comey was overseeing a probe into the ties between Trumpâs former Security Adviser Michael Flynn and Russia in recent months, and had denied a request by the president to end the probe.
The dollar, which rallied in the months that followed Trumpâs victory in the US presidential election as investors anticipated the presidentâs economic stimulus, traded near its lowest level since the election in November. Trumpâs tax reform plan, one of the most hyped and awaited promises that were made during the presidentâs election campaign, will not be completed by August despite efforts made by the Trump administration.
Treasury Secretary Steven Mnuchin said today that, while he hopes that the tax reform will be accomplished this year, it will not be possible to have it ready by August. Mnuchin himself had previously set August as the time when Trumpâs proposed tax cuts will be completed. However, the initial legislative schedule had to be changed after the Congress rejected the original form of the American Healthcare Act, resulting in delays to allow the act to be amended.
Demand for the dollar further suffered today after the US Census Bureau released a joint report with the US Department of Housing and Urban Development on new home sales in April. The report said that 569,000 new houses were sold last month, which came short of estimates of 610,000 and was 11.4% lower than 642,000 in the previous month.
A fresh reading from IHS Markit for its US manufacturing purchasing managersâ index also disappointed expectations. Markit US Manufacturing PMI declined to 52.5 in May from 52.8 in April, compared to predictions of an increase to 53.0. However, the services PMI rose to 54.0 last month from 53.1 in the previous month.
Over recent weeks, US economic data have been showing mixed signals, with a small but clear deviation from stronger numbers in the first quarter of the year. Investors are awaiting major releases this week on gross domestic product, existing home sales, and durable goods orders to look up more signals on the strength of the US economy.
EUR/USD traded at 1.1194 as of 18:20 GMT on Tuesday after rising to 1.1265 at 07:30 GMT, the pairâs highest level since November 9. EUR/USD began trading today at 1.1241. GBP/USD was at 1.2980 from 1.3025 at 15:30 GMT, the strongest level for the pair since yesterday. GBP/USD kicked off trading today at 1.2993.
The Dollar Index, which tracks the strength of the greenback against other major currencies, was at 97.22 as of 18:19 GMT today from 96.98 on Monday.
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