By Dion Rabouin
NEW YORK (Reuters) – The dollar inched up from its lowest level in more than a year on Monday, assisted by stronger-than-expected readings on the U.S. economy, as investors kept a wary eye on developments concerning possible ties between Russia and aides to U.S. President Donald Trump.
The dollar rose from a 13-month low against a basket of six major currencies touched in early trading.
Jared Kushner, Trump’s son-in-law and senior advisor, told Senate investigators on Monday he had met with Russian officials four times last year but said he did not collude with Moscow to influence the 2016 U.S. election.
The ongoing probes into the Russia matter by congressional panels and a Justice Department special counsel, as well as weak U.S. economic data and reduced inflation expectations, have weighed on the dollar for much of the month. Market participants say the investigations have been one factor slowing progress on pushing through Trump’s pro-growth agenda of tax cuts and infrastructure spending.
Speculators’ bets on the dollar swung last week to a net short, meaning more investors bet it will weaken than strengthen, for the first time in more than a year, according to calculations by Reuters and Commodity Futures Trading Commission data. [IMM/FX]
On Monday, Markit’s manufacturing and services flash surveys both showed the U.S. economy beating expectations.
With the dollar having fallen below a number of important technical levels last week, investors are now looking to reprice the currency in the current environment, particularly on the dollar/euro trade, analysts said.
“When we start trading at this relatively unknown area for the dollar and euro you’re starting to look for … whether there could be a selloff and some profit taking,” said John Doyle, director of markets at Tempus Inc in Washington.
“So today, even though data was second tier, it’s not the biggest thing in the world, it is a little bit better. It was an opportunity to sell the euro, buy dollars and take a little profit.”
The dollar index <.dxy> was last trading 0.15 percent higher at 94.006.
The euro has the largest weighting in the dollar index’s basket, at more than 50 percent.
The European currency rose earlier on Monday to a 23-month high against the dollar as investors remained bullish after the latest business growth data for July pointed to only a mild slowdown.
Investors will next look to further U.S. economic data, including consumer confidence and second quarter gross domestic product, and Wednesday’s conclusion of the Federal Open Markets Committee meeting and accompanying statement.
(Editing by Bernadette Baum and Frances Kerry)
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