The US dollar plummeted against the euro on Friday to touch its weakest level since Donald Trump won the US presidential election in November 2016. The greenback had a bad week as traders became worried that the president may face strong political resistance to his economic agenda following the aftermath of his sudden termination of Federal Bureau of Investigation Director James Comey.
During his presidential campaign, Trump made a number of promises that proved exciting for investors, including plans to cut personal and corporate taxes, increase of infrastructure spending, and reduce financial regulations. When Trump won the presidential election on November 9, the US dollar started a strong rally that pushed it to the highest level against the euro in almost 15 years by December 2016.
However, rising concerns that the president might fail to accomplish his economic agenda gradually took away the dollarâs gains over the past weeks, and the firing of Comey last week further fed these concerns. In a rapidly developing controversy, news sources reported on Tuesday that Trump had previously asked Comey to halt a probe into the ties of Michael Flynn, who was a security adviser for the president, with the Russian US ambassador.
Reports of a meeting between Trump and Russian officials earlier this week during which the president handed out sensitive intelligence added fuel to the fire, leading investors to worry whether Trump will be able to finish his term. The US dollar moved lower against the euro this week to lose the last bit of gains it had against the shared currency since November.
Mixed economic data this week gave little support for the greenback, as indexes of manufacturing activity in the New York and Philadelphia regions showed a decrease for the former and a gain for the latter in May. Furthermore, housing starts and building permits both declined in April, while industrial production increased.
Over the next week, traders are expected to closely follow new developments in the latest controversy surrounding Trump, while awaiting reports on manufacturing PMI, new and existing home sales, and durable goods orders. The Federal Reserve will also release the minutes of the latest Federal Open Market Committeeâs meeting and the Bureau of Economic Analysis give its second estimate for GDP growth in the first quarter.
EUR/USD rose to 1.1190 as of 16:50 GMT on Friday from 1.1196 at 14:45, the pairâs highest level since November 9. EUR/USD began trading today at 1.1109.
The Dollar Index, which measures the strength of the US currency against its major counterparts, dropped to 97.25 as of 15:45 GMT today from 97.87 yesterday.
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