U.S. housing data, political turmoil hit dollar; global stocks flat

Tue May 16, 2017 5:03pm EDT
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By Rodrigo Campos

NEW YORK (Reuters) - The U.S. dollar index touched its lowest level since early November on Tuesday, hurt by weaker-than-expected U.S. housing data and as political turmoil in Washington raised anew concerns about the outlook for passing expected legislation.

A rally in the euro was reinforced by dollar losses, prompted by reports that U.S. President Donald Trump disclosed highly sensitive intelligence information to senior Russian officials at a meeting last week.

The disclosure adds to concern over the administration's chances of passing legislation, including tax reform, that has been priced in partly by financial markets. Major U.S. stock indexes remain at or near record highs, supported by the strongest earnings season for S&P 500 components since 2011.

The dollar fell even after U.S. manufacturing production recording its largest increase in more than three years.

The downtrend in the U.S. currency could extend further, according to Boris Schlossberg, managing director of FX strategy at BK Asset Management, given the potential for further political fallout relating to Trump's intelligence disclosure.

"It seems like progressively every single day it gets more and more beyond any sense of normal leadership and ultimately that kind of political volatility does translate into economic volatility," Schlossberg said.

The dollar index fell 0.73 percent, with the euro up 0.99 percent to $1.1082.

The dollar index had reached 14-year highs in early January on the view that Trump's plans for tax cuts and infrastructure spending would boost growth and inflation. It has now fallen four consecutive sessions, hitting six-month lows.   Continued...

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 12, 2017. REUTERS/Brendan McDermid