This week, the Dollar nursed its losses after taking a hit from solid Eurozone economic data, a fall in US Yields on heightened turmoil in Washington and downbeat housing data that reduced expectations of a Federal Reserve rate hike next month.
US Treasury yields fell, raising doubts about the monetary policy outlook, after data showed building permits dropping to 1.23M in April and housing starts posting a fall to 1.17M. Pressure on the Dollar increased after news that Trump asked his now-dismissed FBI Director James Comey to end the agency’s investigation into ties between former White House national security adviser Michael Flynn and Russia. The memo raised questions about whether Trump tried to interfere with a federal investigation at a time when investors were beginning to doubt that his administration would be able to get a divided US Congress to support its promised policy steps.
On Wednesday, Oil prices slipped after data showed an increase in US Crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russia to extend output cuts. Data from the API showed US Crude inventories rising by 882,000 barrels to 523.4 million in the week of May 12. Meanwhile, investors are waiting for readings from the EIA due later today.
Meanwhile, the safe haven Yen pushed below ¥113 against a weaker Dollar, to the strongest level since May 2008 early session, as rising political uncertainties in US weighted on the Dollar. The rebound in the Yen could gain further momentum if investors consider the Fed to be under less pressure to pick up the pace of rate hikes should core inflation remain subdued.