NEW YORK (BLOOMBERG, REUTERS) - The US dollar fell to its lowest level in nearly two years against the euro on Thursday (July 20) as comments by European Central Bank chief Mario Draghi that policymakers would discuss possible changes to its bond-buying scheme in the autumn were followed by a report that US special counsel Robert Mueller was investigating transactions linked to US President Trump and some of his advisers.
The euro began its ascent after Draghi said the central bank will discuss in the autumn any plans for tapering quantitative easing. Though Draghi said no date had been set for discussing any changes to the programme and that ECB rate-setters had been unanimous in their decision not to change their guidance on monetary policy, investors suspected discussions in the autumn would lead to monetary tightening next year.
The dollar then declined sharply after the report on the Mueller investigation, weakening against most G-10 peers. The Bloomberg dollar index fell to its lowest since August as the investigation piled onto the dollar's woes from earlier in the week after Republicans' health-care bill stalled, casting doubt on other parts of the administration's fiscal agenda.
The euro climbed as high as US$1.1655 against the greenback after Draghi spoke, putting it up as much as 1.2 per cent on the day and marking its highest level since August 2015. The euro was last on course for its biggest daily percentage gain in more than three weeks.
The dollar index, which measures the greenback against a basket of six major rivals, hit a session low of 94.090, marking its lowest level in nearly a year. The index pared some losses in afternoon US trading and was last down 0.5 percent at 94.286.
The dollar was last flat against the yen at 111.96 yen after touching a more than three-week low of 111.49 earlier.
The Bank of Japan kept monetary policy steady on Thursday but once again pushed back the timing for achieving its ambitious inflation target. The view that the BoJ was maintaining its easy money policies allowed the dollar to remain somewhat steady against the yen, analysts said.
"There is not going to be any shift... so (the) yen should continue to remain on the weak side," said Jason Leinwand, founder of FirstLine FX Currency Strategy in Randolph, New Jersey.