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Dollar tumbles as euro rises to six-month highs

Published 05/22/2017, 01:06 PM
Updated 05/22/2017, 01:11 PM
Dollar tumbles as euro rises to six-month highs

Dollar tumbles as euro rises to six-month highs

Investing.com – The dollar fell against a basket of major currencies on Monday, weighed by surge in the euro, after German Chancellor Angela Merkel said the single currency was “too weak”.

Speaking to students at a secondary school in Berlin, Merkel said that the euro is “too weak”, as a result of European Central Bank accommodative monetary policy.

EUR/USD soared to a six-month high of $1.1263, as investors believed that Merkel’s comments would pressure ECB policymakers to consider tapering the central bank’s expansive monetary stimulus package, which includes ultra-low interest rates.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.12% to 96.88 by 13:09 EDT.

The dollar made a poor start to the week, coming off the back of its worst week in more than a year, after a tumultuous week in U.S. politics led investors to doubt whether President Trump would be able to deliver on his pro-growth initiatives to boost the economy.

The Trump administration has promised to introduce a pro-growth agenda, widely viewed as inflationary, which includes tax-reform, deregulation and a $1 trillion infrastructure spending package.

Meanwhile, GBP/USD slumped 0.18% to $1.3011, as investors grew wary of a general election surprise amid polls over the weekend showing the Labour Party narrowed the large lead that had been enjoyed by the Conservative Party.

Demand for safe-haven yen eased, as USD/JPY traded roughly flat at 111.12, despite renewed geopolitical concerns, after North Korea confirmed it successfully launched another medium-range ballistic missile on Sunday.

USD/CAD traded at $1.3508, down 0.01%.

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