TOKYO – The dollar was under pressure in Asia Thursday on fears that US President Donald Trump’s mounting political woes will stall his economic growth plans and a June rate hike.
Trump has been accused of asking former FBI chief James Comey — who he later sacked — to stop a probe into ex-national security advisor Michael Flynn and that he revealed classified information to Russian diplomats.
“The market’s key focus right now is the political uncertainty linked to the Trump allegations, not economic fundamentals,” said Toshihiko Sakai, a senior dealer at Mitsubishi UFJ Trust and Banking.
“President Trump hasn’t done much yet, but his economic agenda keeps getting delayed.
“People are selling stocks, buying bonds and selling the dollar — what we’re seeing is a typical risk-off market,” he told AFP.
Late Wednesday, the New York Times reported that Flynn told the then president-elect’s transition team that he was the subject of a federal investigation, but was hired for the post anyway.
Flynn, who ended up being fired from the position after just 24 days, is at the centre of a federal investigation into alleged Russian interference in the 2016 US presidential election.
“Investors now believe that at a minimum the rising US political entropy will jeopardise the White House policy agenda, and at the extreme, a Trump impeachment will lead to a flat out market collapse,” said Stephen Innes, a senior trader at forex firm OANDA.
“The market is becoming less sure about a June Fed interest rate hike as the pandemonium in Washington and sagging equity markets will not go unnoticed by (Fed chair) Dr Yellen and company.
“It’s a toxic brew for dollar bulls who are getting steamrolled from every possible angle,” he added.
In Tokyo, the dollar was changing hands at 111.14 yen, up slightly from 110.96 yen in New York but still well below the 112-yen range seen earlier in Asia on Wednesday. Jittery investors typically buy Japan’s currency as a safe investment.
The euro was at $1.1142 against $1.1157 while the pound fetched $1.2964 compared with $1.2967.-AFP