The dollar took a leg lower on Thursday, with the benchmark DXY index hitting a fresh 11-month low, on reports that Robert Mueller, the special counsel who is investigating possible ties between the Trump campaign and Russia, has expanded his probe to include transactions involving the president’s businesses.
The Bloomberg report, if true, is expected to inject even more uncertainty into Donald Trump’s already tumultuous start as president and could further weaken the prospects of his administration pushing through proposed tax reforms and fiscal stimulus. The two initiatives are both seen as business-friendly and have contributed to the markets’ record setting run this year.
The DXY index fell as much as 0.7 per cent to 94.09 — its lowest level since last August.
The buck’s drop was particularly pronounced against the euro. The common currency was already up earlier in the day following comments in which Mario Draghi, head of the European Central Bank, played down the euro’s recent rally. The euro extended its rise to 1.2 per cent to $1.1680 following the Mueller report.
The stock market’s reaction was more muted however. Both the S&P 500 and the Nasdaq Composite fell briefly before rallying and are now trading largely unchanged at 2,472.56 and 6,385.06. The Dow Jones Industrial Average is off 0.2 per cent.