US dollar extends losses as Trump crisis fuels fears for agenda, down 1% to Sing$ this week

A series of below-par economic readings out of Washington added to dollar selling.
A series of below-par economic readings out of Washington added to dollar selling. PHOTO: REUTERS

HONG KONG (AFP) - The US dollar sank on Wednesday (May 17) with a fresh crisis in the White House fuelling concerns that Mr Donald Trump's economy-boosting agenda could be run off-track.

The administration was once again rocked by allegations over its links to Russia after it emerged the tycoon had divulged classified information to the nation's foreign minister.

That was followed late on Tuesday by claims by recently fired FBI boss James Comey that Mr Trump pressed him to drop a probe into ex-national security adviser Michael Flynn over his links to Moscow.

The dollar took a beating in New York and extended the losses on Wednesday. The euro was flirting with US$1.11, a level not seen since Mr Trump's election win in November, while the yen is also piling pressure on the US unit. The dollar bought 112.67 yen, down from levels above 114 yen seen last week.

Against the Singapore dollar, the US currency was trading at S$1.3938 as of 11.50am, down 0.3 per cent from Tuesday's close. So far this week, the US dollar has weakened by 1 per cent against the Singdollar. It closed last Friday at S$1.4081.

While the Oval Office has furiously denied any wrongdoing, there is a growing sense of crisis that could even lead to the president's impeachment, throwing into doubt his plans for tax cuts, big spending and red tape slashing.

Bets that the plan would fire the economy helped fan a dollar and global equities rally in the months after Mr Trump's election.

"There has been a lot of focus on the US president who admitted that he did share information with Russia," said Mr Greg McKenna, chief market strategist at AxiTrader.

"But what's potentially important for markets in the weeks and months ahead is that the president's apparent missteps may galvanise his opponents, which could make it harder to implement his economic agenda." .

"At the very least the view is that Trump's economic policies will be delayed over this, and the dollar is being sold," Tomoichiro Kubota, an analyst at Matsui Securities in Tokyo, told Bloomberg News.

"At the moment there's a strong sense of investors trying to gauge how far this will go. It's a situation where you can't completely rule out the possibility of impeachment down the road, so it's difficult for investors to buy."

A series of below-par economic readings out of Washington are also adding to dollar selling, while the euro is growing more attractive as political uncertainty in Europe abates and indicators point to a healthy pick-up in growth.

On equities markets Tokyo was down 0.5 per cent by the break as the stronger yen weighed on exporters, while Sydney shed 0.8 per cent and Seoul sank 0.1 per cent.

Hong Kong and Shanghai were marginally lower, while Singapore, Taipei and Jakarta all retreated.

The losses came despite another record close in London and New York.

With additional information from The Straits Times