Investing.com - The U.S. dollar fell to post-election lows against a basket of the other major currencies on Tuesday, as President Donald Trump’s legislative agenda faltered and doubts lingered over plans for another rate hike by the Federal Reserve this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.6% to 94.35 by 11.36 a.m. ET (15.36 GMT), the lowest level since August 29, 2016.
The dollar weakened across the board after a second attempt by Republicans to replace Obamacare collapsed, delivering a major policy blow to the Trump administration.
Around half of the cuts in health-care spending were earmarked to finance proposed tax cuts. The failure to deliver healthcare reform added to disappointment over the lack of progress on Trump’s economic agenda.
The dollar was already on the defensive after Friday’s weak U.S. inflation and retail sales data added to doubts that the Fed will be able to raise interest rates again this year.
The dollar hits almost three-week lows against the yen, with USD/JPY down 0.64% to 111.90.
The euro rose to fresh 14-month highs against the dollar, with EUR/USD advancing 0.83% to 1.1573.
Sterling was lower, with GBP/USD down 0.2% to 1.3029 after data showing that the annual rate of inflation in Britain fell for the first time since October last month.
It was the largest decline in inflation since February 2015, easing pressure on the Bank of England to raise interest rates.
The Australian dollar jumped to two-year highs, with AUD/USD adding 1.58% to trade at 0.7925 after the minutes from the central bank's last policy meeting showed it turning more upbeat on the economic outlook.
The New Zealand dollar was also higher, with NZD/USD rising 0.65% to 0.7365.
The kiwi initially turned lower overnight before regaining ground after weak inflation data indicated that the country’s central bank will keep interest rates on hold for longer.
The Canadian dollar hit fresh 14-month highs, with USD/CAD last at 1.2636.