The U.S. dollar was depreciated by a much stronger euro last Monday. This is driven by concerns over the political future in the United States following the departure of the communications director in the White House.
The index which tracks the value of the greenback versus its major peers, the U.S. dollar index, touches a 2-1/2 year low of 92.85 after the news that Anthony Scaramucci will leave the office. The currency was also surpassed by the Japanese yen at 110.32 yen. The on-going concerns surrounding the power of U.S. President Donald Trump on accomplishing his tax reform agendas is one of the reasons why the index dropped as much as 2.9 percent last July. This is considered as its largest monthly decline since the end of Q1 2016.
Oanda’s senior currency analyst Alfonzo Esparza suggested that the credibility of Trump’s administration will be at stake again on Scaramucci’s exit.
On the previous session, euro beats the U.S. dollar due to released inflation figures in the euro zone and traders bringing the currency as part of month-end portfolio adjustments which bolstered projections for a less-dovish European Central Bank (ECB). The common currency added another 0.8 percent against the dollar following the report of New York Times suggesting Trumps decision on firing Scaramucci.
BMO Capital Markets’ foreign exchange strategist Greg Anderson says the economy of Europe is really performing well and as an outcome we should expect monetary stimulus over the medium term to adjust.
In addition to the factors that hurt the dollar, uncertainties of a poor inflation in the United States could result to a lest hawkish Fed.