TOKYO (Reuters) – The dollar struggled near a 13-month low against a basket of major currencies yesterday as US political turmoil dampened hopes for quick passage of President Donald Trump’s stimulus and tax reform agendas and the euro extended gains.
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The Trump administration, already dogged by investigations into alleged Russian meddling in the US election, took a fresh hit on Friday after White House spokesman Sean Spicer resigned, highlighting the upheaval within the president’s inner circle.
The dollar index, which tracks the greenback against six major currencies, was little changed at 93.887, after touching 93.823, its lowest since June 2016.
“For any chance of the dollar bouncing back in the near term, it will need a rebound in US yields,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
“The current US political situation is weighing heavily on US yields. So we will need strong US data to dislodge US yields from their low levels,” he said.
The benchmark 10-year US Treasury note yield hit a three-week low on Friday, as a retreat on Wall Street kindled safe-haven demand for debt.
The euro was steady at $1.1668 after inching up earlier to a 23-month high of $1.1684.
The common currency’s advance was limited after euro zone yields fell across the board on Friday, with the strong currency prompting investors to question the timing of the ECB’s planned stimulus withdrawal.
The euro has been on strong footing this month after what the markets perceived as hawkish talk from ECB President Mario Draghi reinforced views that the central bank would begin moving away from its easy policy sooner rather than later. Neither did he express any concern at the currency’s strength.
The dollar slipped 0.15 percent to 110.970 yen, with the Japanese currency at its strongest in roughly five weeks.