Forex - Euro hits fresh 2-1/2 year highs against weaker dollar
The euro rose to fresh two-and-a-half year highs against the broadly weaker dollar on Wednesday as deepening political turmoil in Washington continued to weigh on the greenback.
EUR/USD hit highs of 1.1868, the most since December 2014. It pulled back to 1.1842 by 04.19 a.m. ET (08.19 a.m. GMT).
The dollar came under renewed selling pressure as political risks in the U.S. continued to weigh.
The White House on Tuesday confirmed that U.S. President Donald Trump played a role in drafting a statement about his son’s meeting with a Russian lawyer during last year’s election campaign, which was later shown to be misleading.
The fresh revelations added to investors’ fears that the ongoing controversies embroiling the Trump administration will make it more difficult to make progress on the president’s economic agenda.
Recent lackluster U.S. economic reports, which have raised doubts over the future pace of policy tightening by the Federal Reserve, have also fed into dollar weakness.
Investors were looking ahead to Friday’s nonfarm payrolls report for July for fresh indications on the possible direction of Fed policy.
The ADP nonfarm payrolls report was due out later Wednesday and San Francisco Fed President John Williams and Cleveland Fed chief Loretta Mester were also due to speak.
Demand for the euro continued to be underpinned by expectations that the European Central Bank will begin scaling back its monetary stimulus program in the autumn.
Data on Wednesday showed that producer prices in the euro zone rose by 2.5% year-over-year in June, the slowest increase in so far this year. The data indicated that inflationary pressures in the bloc are easing.
The report came after figures earlier this week showed that headline inflation in the euro zone was steady at 1.3% in July, but underlining inflation rose to its highest level in four years.
The dollar had been supported by the Fed's gradual policy tightening since late 2015 but the prospect that other major central banks may join it in tightening monetary policy have weighed.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.19% to 92.74, pressured lower by the stronger euro.