US dollar hits lowest level since November as euro rallies

The US dollar has touched its lowest since early November on Tuesday, hurt by weaker-than-expected US housing data and concerns after political turmoil once more hit Washington.

A rally in the euro was reinforced by dollar losses, prompted by allegations that US president Donald Trump disclosed highly classified information to Russia’s foreign minister about a planned Islamic State operation.

The story about Trump and Russia “probably is playing out as a weaker dollar on the view that Trump may not be around long enough to deliver his tax reform, which is at least partially priced into the dollar,” said RBC Capital Markets currency strategist Adam Cole, in London.

The dollar index fell 0.65 per cent, with the euro up 0.91 per cent to $1.1073.

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The dollar index had reached 14-year highs in early January on the view that Trump’s plans for tax cuts and infrastructure spending would boost growth and inflation, but it fell to six-month lows on Tuesday.

US manufacturing production posted its biggest increase in more than three years in April, bolstering the view that economic growth picked up early in the second quarter – despite a drop to a five-month low in housing starts.

US Treasury yields fell after the housing data added to recent soft economic news that has raised new doubts over how many times the Federal Reserve will raise interest rates this year. – (Reuters)