July 24, 2017 (LBO) – The U.S. dollar fell to levels seen more than an year ago with President Donald Trump failing to deliver on tax cuts and infrastructure spending, analysts said.
The dollar index, which measures the greenback against a basket of currencies, traded at 93.904, declining from levels above 95.00 traded in the previous week, CNBC reported.
“A lot of people came into this year expecting a big stimulus from Trumponomics, potentially a big tax cut, infrastructure,” Richard Clarida, global strategic adviser at Pimco said.
“And of course, we haven’t got the tax cut, infrastructure is down the road and Congress is squabbling over health care. So some of the folks who really thought this would be a gangbusters year have been disappointed.”
Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, said the dollar index is still about “2 percent above the critical technical level of around 92.00, below which the risk is for accelerated moves to the downside.”
Asia traded mostly lower on Monday, with markets focused on the dollar and the upcoming two-day policy meeting from the Fed later in the week.
A more resilient euro was contributing to the dollar moves, analysts said.
“There has been very little backpedaling on the long euro storyline as dealers continue to place much emphasis on Draghi declining the opportunity to talk down the currency post ECB minutes,” said Stephen Innes, head of trading for APAC at OANDA.
Jasslyn Yeo, global market strategist at JPMorgan Asset Management, said the dollar may rebound in the second half as the markets re-price in interest rates hikes.