Dollar tumbles to 15-month low due to Washington politics and soft US economic data

The US dollar briefly touched a 15-month low against a basket of major currencies on Tuesday on political turmoil in Washington and weak US economic data that kept the Federal Reserve’s policy outlook uncertain.

The dollar was last higher on the day as investors consolidated positions, but it was still not far from its lowest in more than a year against major rivals as political uncertainty was expected to continue weighing on the greenback following President Donald Trump’s ouster of White House communications chief Anthony Scaramucci on Monday.

Market concerns also persisted about whether the Fed would raise interest rates again this year. Traders’ bets last reflected a roughly 46 per cent chance of a Fed rate hike in December, according to CME Group’s FedWatch tool.

The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.2 per cent at 93.060 after touching 92.777, the lowest since early May 2016.

The dollar index fell in July, its fifth consecutive monthly decline, the longest such stretch since December 2010 through April 2011. On a monthly basis, it was the biggest drop since March 2016.

“It’s all about negative dollar momentum,” said Vassili Serebriakov, FX strategist at Credit Agricole in New York. “If you’re short the dollar, the move has been playing out in your favour and there is little reason to change the view.”