US dollar hits six-month lows

The dollar hit six-month lows amid fresh Trump controversy and weak US economic data.

Reports that President Donald Trump had asked FBI director James Comey to halt the investigation into national security adviser Michael Flynn stunned commentators.

Further adding to the downward pressure on the dollar was the release of weaker US housing data.

The US dollar fell against a basket of currencies and was down by around 0.7% against the Japanese yen this morning.

Trump woes

According to reports first aired in the New York Times on Tuesday, Comey wrote a memo following a meeting with Trump on 14 February, claiming the president had asked him to end the investigation into Flynn. National security adviser Flynn was forced out of office in February over his alleged conversations with Russia´s ambassador. Comey, meanwhile, was sacked by Trump last week amid criticism over his handling into the inquiry over Hillary Clinton´s emails.

The latest development further fuels the ongoing speculation that Trump could eventually face impeachment.

Weaker US data

As well as the political drama unfolding in Washington, the dollar is also having to absorb some weaker US economic data. The dollar´s slide on the back of the latest Trump revelations was exacerbated by the release of data showing that US housing starts slowed in April, disappointing forecasts.

Data released last month also showed that US economic growth had dramatically slowed during the first few months of 2017.

Fed tightening?

Weaker economic figures should lower the chances of the US Federal Reserve (Fed) raising interest rates over the coming months, though it previously forecast three rate rises for the whole of 2017.

The Fed has already hiked interest rates once this year, with its March rate increase following on from the widely-anticipated rate hike in December.

The greenback appears on course for further losses given weaker political and economic sentiment. It has already lost most of the gains made following Trump´s win in November when the currency was propelled by hopes of increased US fiscal stimulus and an accelerating US economy.