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U.S. dollar wallows near 14-month lows

8/1/2017, 6:38:47 PMTrading Strategies
U.S. dollar wallows near 14-month lows

 The U.S. dollar was wallowing near 14-month lows against a currency basket on Tuesday after falling for a fifth consecutive month in July in what is its longest losing streak since 2011.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 92.8 by 03.39 a.m. ET (07.39 a.m. GMT) after falling as low as 92.64 on Monday, the weakest since May 2016.

The index fell 2.88% in July, its fifth straight monthly decline and its largest monthly percentage decline since March 2016.

Deepening political turmoil in Washington and diminished expectations for a third rate hike by the Federal Reserve this year have pressured the dollar lower.

The dollar remained on the defensive after data on Friday showing that while U.S. economic growth accelerated in the second quarter wage growth and inflation remained sluggish.

The subdued inflation outlook has raised doubts over whether the Fed will be able to stick to its planned tightening path.

The dollar had been supported by the Fed's gradual policy tightening since late 2015 but the prospect that other major central banks may join it in tightening monetary policy has fed into recent dollar weakness.

Fading hopes for tax reforms and fiscal stimulus under the turbulent Trump administrationhave also weighed on the dollar.

The dollar was near one-and-a-half month lows against the yen, with USD/JPY at 110.19, near an overnight trough of 110.01.

The euro was slightly lower, with EUR/USD down 0.16% to 1.1821, after touching a two-and-a-half year high of 1.1845 overnight.

Sterling was steady, with GBP/USD at 1.3208 after rising to a ten-month peak of 1.3232 in Asian trade earlier.

Meanwhile, the Australian dollar pared gains after the country’s central bank left interest rates on hold overnight and expressed growing concerns over the stronger local dollar.

AUD/USD was last at 0.8005 off an earlier high of 0.8043