Trump Lurches From Crisis To Crisis, Dollar Gains Evaporate

TOKYO (Reuters) - The dollar wallowed near six-month lows against a basket of major currencies on Thursday as the US political crisis appeared to deepen, threatening to delay efforts by President Donald Trump to implement his economic stimulus plans.

In early European trade London dropped 0.3 percent and Paris was flat while Frankfurt gave up 0.1 percent.

Wednesday was a rude awakening for the markets with the Dollar and U.S Treasuries buckling at the knees as the markets continued to respond to the noise from Capitol Hill, with no macroeconomic data for the markets to be distracted by, the Dollar Spot Index falling by 0.54% on the day. Stocks in Shanghai fell 0.5% but expectations for more infrastructure spending-particularly focused on a new economic region near Beijing-boosted construction and property stocks.

The allegations surrounding Trump have not only thrown doubt over the future of the pro-growth policies he promised, but have raised the possibility he could end up leaving the White House prematurely.

The region's shares showed little reaction to news that former Federal Bureau of Investigation chief Robert Mueller was appointed to investigate alleged Russian interference in the 2016 United States election, although the S&P mini futures were a shade higher while the dollar bounced modestly against the safe-haven yen.

The greenback sank below 111 yen for the first time since the end of April before edging back marginally, while the euro - itself buoyed by easing uncertainty in the European Union and a pick-up in eurozone economic fortunes - continued to levels not seen since Trump's election win.

AbbVie slipped 2.8 percent to $65 after Coherus BioSciences received a favorable patent ruling against AbbVie's Humira drug.

"The appointment appears to be an attempt at tackling the problem early. As such, the markets are still faced with uncertainty", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

Trouble mounted for Brazilian President Michel Temer, who was recorded discussing payments to silence testimony by a potential witness in the country's biggest-ever graft probe, sources told media including Reuters.

More news: North Korea missile test is huge step forward

Tokyo plunged 1.3 percent, with investors brushing off data showing Japan's economy posted another quarterly rise in growth, marking its longest expansion in more than a decade.

The euro EUR= hit a six-month high of $1.1174 and last stood at $1.1143, down 0.1 percent on the day.

"But judging by how steeply the dollar has fallen, participants may have already priced in much of the negative news regarding Trump".

Stock market prices fluctuate over Trump's decision and the dollar hit a downfall on Wednesday.

The U.S. Dollar Index measures the strength of the greenback against six main currencies.

And in a sure sign of the rising fear levels the yield on the 10-year Treasury bond was off 10 basis points at 2.22%, the biggest fall in the yield for 11 months.

With Treasury yields falling the gap between US and German government debt yields reached its narrowest in more than six months on Wednesday as a tumultuous week in Washington contrasted with a sense of improved political stability in Europe.

Asian stocks climbed to a fresh-two year high on Tuesday on the back of an overnight rise in Wall Street, while oil extended gains after major producers Saudi Arabia and Russian Federation pledged to push for an extension of supply cuts into 2018.

(Copyright © 2015. All Rights Reserved.)
 
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