Investing.com - The dollar fell to fresh three-week lows against the yen on Thursday and was stuck near six month lows against a currency basket as concerns over the future of Donald Trump’s presidency mounted.
On Wednesday the Justice Department appointed a former FBI director as special counsel to investigate alleged Russian interference in November’s presidential election, as well as possible collusion by President Donald Trump’s campaign team.
The appointment of a special counsel comes after Trump fired James Comey, his FBI director who was leading a probe into Russia’s role in the election and reports that he attempted to interfere with the judicial process, leading to talk of possible impeachment.
The dollar has been hard hit by fears that the U.S. political system could become engulfed by crisis, preventing lawmakers from pushing through tax or spending reforms.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell as low as 97.28 overnight, its lowest level since November 9, having given up all the gains it had made following the election in November.
The index was last at 97.44, up 0.1% for the day.
The dollar index has now fallen more than 5% from its 14-year high of 103.82 set on January 3, as investors lost faith in the so-called ‘Trump Trade’.
A recent run of disappointing U.S. economic data, including inflation, retail sales and housing starts has also weighed on the dollar, tempering expectations for higher interest rates.
The dollar fell to fresh three-week lows against the safe haven yen, with USD/JPY down 0.35% to 110.43 having ended the previous session down 2.03%, the largest one day decline since July 29, 2016.
The yen showed little reaction to data showing that Japan’s economy grew by 2.2% year-over-year in the first quarter, ahead of economists’ expectations for growth of 1.7%.
The euro was slightly lower, with EUR/USD slipping 0.25% to 1.1129 after rising to six-month peaks of 1.1172 earlier.
USD/CHF hit a six-month trough of 0.9773 on Wednesday and last stood at 0.9778.
Meanwhile, sterling rose above the $1.30 level for the first time since September on Thursday after data showing that UK retail sales notched up their biggest gain since January 2016 last month.