On Monday, the dollar gained a little ground against its major rivals. The ICE U.S. Dollar Index climbed to 93.99 compared to a 93.85 last Friday. The greenback has been seen dropping for about 1.4% last week and around 1.7% for the month of July.
Dollar under Pressure for the Past Weeks
“The dollar has been under pressure for the past weeks on the back of lackluster U.S. data that cast doubt on the Fed’s bullish outlook, and traders are now questioning the possibility of another rate hike during 2017,” one foreign analyst said.
The Federal Reserve is set to have its policy-setting meeting on Tuesday and Wednesday and this in turn can put firmness on the outlook of the greenback and its policy steady. Traders would, of course, want to know the stand of the central bank and its upcoming plans.
Dollar and the Trump Administration
The U.S. dollar index was seen at its brink since June 22, 2016 with a recorded data of 93.65. Moreover, the dollar is being shaken by upheaval concerns on the current Trump administration.
The dollar had been previously under pressure after reports came out regarding the collusion between U.S. President Donald Trump and the Russian government during the campaign period for last year’s election.
In addition, last Friday, Sean Spicer (White House Press Secretary) declared his plan of resigning after expressing his strong disagreement in selecting the new White House Communications Director, Anthony Scaramucci and after telling that the decision made by the President was a huge mistake.
Dollar vs. Other Currencies
Today the USD/JPY traded at 110.82 yen, whereas the EUR/USD plunged to $1.1646. The GBP/USD on the other hand soared to $1.3016. The AUD/USD rose by 0.37% to 0.7943 and the NZD/USD dipped by 0.31% to 0.7433.
Analysts Blame Trump
Greg Valliere of Horizon Investments said in a statement, “Global investors had expected progress on health and tax reform by this summer, but that isn’t going to happen. Now there will be a focus on budget issues – which could stall after Labor Day, leading to a crisis as the fiscal year ends on September 30. We still expect progress on tax reform by later in the fall – but it could be a rocky ride between now and then, as Trump focuses more on the Russia probe than his own agenda.”
Certainly, Valliere described this state as the “Trump Slump.” Even Larry Adam of Deutsche Bank Wealth Management says, “Delays in the pro-growth Trump administration policies have not bolstered growth and in fact, the delay has led to disappointments in the US growth trajectory.”
The general weakness of the U.S. dollar is attributable to the political issues of the Trump administration. However, the weakness of the greenback would not persist for so long since the Fed meeting will be held this week and depending on the result, there is a possibility that it will lift the dollar from its longtime decline. The markets are looking forward to the Fed’s meeting to be held this Tuesday and Wednesday.