The dollar gave up all its gains since the election of President Trump, undermined by uncertainty surrounding the legislative agenda amid political turmoil that also prompted a steep fall in US stocks and Treasury yields.
Reports claimed that classified USA information was revealed by U.S President Donald Trump to a Russian diplomat which shook the markets sending the greenback to a fifth day of decline while the euro recorded its highest since November.
The disclosure adds to concern over the administration's chances of passing legislation, including tax reform, that has been priced in partly by financial markets.
And Citi´s USA economic surprise index continues to plunge deeper into negative territory, falling to its lowest level since May last year, while the euro zone equivalent remains close to its highest levels of the year.More news: Qualcomm files breach of contract complaint against Apple's manufacturers
SINGAPORE, May 16 The euro touched a one-week high on Tuesday ahead of the release of euro zone gross domestic product data, as the dollar struggled to gain traction in the wake of a surprisingly soft USA manufacturing report. Though the White House has denied the allegation, there's mounting unease in markets over the developments in the US government.
The dollar index, which measures the greenback against six other major currencies, and which rose to 14-year highs earlier this year on the view that Trump's plans for tax cuts and infrastructure spending would boost growth and inflation, fell to its weakest in over six months. But it fell to six-month lows on Tuesday. The dollar eased 0.3 percent against the yen near 113.47, after rising 0.4 percent on Monday.
Trump's economic proposals - slashing taxes, cutting regulation and pumping up infrastructure spending - lifted the U.S. dollar after the election because many thought they could give the American economy a shot in the arm.
"It's a combination of earnings and better-than-expected industrial production countered with concerns about future economic data and the fact we continue to see weak retail sales", said Kate Warne, investment strategist at Edward Jones in St. Louis.More news: CBS Doubles Down On Sheldon Cooper
Amidst ongoing issues regarding declining crude oil prices and issues with Trump revealing classified information to Russia's top diplomat, the dollar hit a six-month low continuing from a recent snag the currency has hit in the past week.
The dollar fell in Asia on Wednesday, with the chaotic US political situation weighing on expectations for economic policies favoring tax cuts and higher spending and as key lawmakers call for a memo reportedly written by former FBI director James Comey on Trump discussing an active investigation to be released.
Emerging market stocks rose 0.51 percent. The crude oil's rise was also driven by Russian Federation and Saudi Arabia's willingness to extend production cuts. Sterling was last trading against the dollar at $1.2918, up 0.13 percent on the day.
Benchmark 10-year notes gained 3/32 in price to yield 2.33 percent, down from 2.36 percent before the data's release. USA gold futures gained 0.57 percent to $1,237.00 an ounce.More news: White House goes blue to honor nation's police officers
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged down 0.1 percent after hitting its highest level since June 2015 in opening trades. South Korea's Kospi dipped 0.1 percent to 2,293.08.