The dollar inched higher on Monday, but remained close to six-month lows against a basket of currencies as investors assessed the impact of the latest bout of US political turmoil and a resurgent euro.
The dollar index, which tracks the greenback against a basket of six major rivals, steadied 0.2 percent from Friday’s late US levels to 97.292.
But it was hovering not far from the previous session’s low of 97.080, which was its deepest trough since November 9.
US President Donald Trump, now on a trip to the Middle East, left behind political drama in Washington that some fear could derail his administration’s promises of tax reform and fiscal stimulus, if not his presidency.
Those fears threaten to offset much of the dollar-positive sentiment generated by expectations for a US interest rate rise next month.
Trump’s budget proposal, set to be unveiled on Tuesday, will include cuts to Medicaid and propose changes to other assistance programmes for low-income citizens, the Washington Post reported on Sunday.
Uproar over Trump’s recent firing of FBI Director James Comey, who was overseeing an investigation into possible links between the president’s election campaign team and Russia, has pressured the dollar.
A current White House official is a significant person of interest in investigation, the Washington Post said on Friday, citing people familiar with the matter.
That news sent Treasury yields lower on Friday, sapping the dollar’s appeal, though they took back some ground on Monday.
The benchmark 10-year US Treasury yield stood at 2.253 percent in Asian trading, above its US close on Friday of 2.245 percent.
The second reading of first-quarter US gross domestic product will be released on Friday and is expected to be revised up from a preliminary estimate of annual growth of 0.7 percent.
That would be the weakest growth in three years, though many economists think it will just prove to be a blip.
Futures traders are pricing in about a three in four chance of a June rate hike, but only about a 40 percent chance of two or more rate hikes in 2017, according to the CME Group’s FedWatch Tool.
St. Louis Fed President James Bullard said on Friday that the US central bank’s expected plans for rate increases may be too fast for an economy that has shown recent signs of weakness.
Several Fed policymakers are due to speak this week, and the central bank on Wednesday will publish minutes of its May meeting, which preceded the most recent political developments.