Dollar Tumbles, Euro Gains After Trump Jr. Releases Emails

  • EUR rises to fresh high above 1.1470, highest since May 2016
  • JPY gains after earlier touching lowest since March 15 vs USD

Swissquote Says Trump Can't Push Pro-Dollar Story Ahead

The dollar declined versus most it its G-10 peers, alongside a drop in U.S. equities and Treasury yields, after Donald Trump Jr. released emails related to a meeting last year with a Russian lawyer.

Trump Jr. acknowledged that he was told before the meeting that the lawyer had potentially damaging information on Hillary Clinton that came from officials in Moscow as part of an effort to help his father’s presidential campaign. The Bloomberg Dollar Spot index declined as much as 0.2 percent, falling for a second straight day. Meanwhile, markets are awaiting congressional testimony from Federal Reserve Chair Yellen Wednesday as attention remains on central banks and their relative standings in a global shift toward policy normalization.

  • After the email release, UST 10Y yield dropped to a fresh low for the day at 2.353%, and the S&P 500 slid as much as 0.6%; separately, Fed Governor Lael Brainard said she backs balance-sheet runoff “soon” while signaling she’s in no rush to raise rates further
  • EUR/USD is trading near a 14-month high of 1.1480, eclipsing recent highs at 1.1445 from late June that were the start of a triple-top formation
    • EUR may face tech resistance at 1.1479, the May 6, 2016 high, as it heads toward the 2016 peak at 1.1616
  • USD/JPY is trading around 113.91 after falling from 114.49, highest since mid-March, to 113.72 in a move unleashed by email release. USD is expected to face offers and technical resistance near 115.00, though some may be expecting stronger gains amid demand for upside strikes in the options market where USD/JPY is the busiest pair, according to DTCC data
    • The yen earlier fell to a 17-month low versus the euro and weakened versus the dollar after a well-received 5-year JGB auction overnight kept the short end of the Japanese yield curve well anchored, preventing unwelcome spillover from a global bond selloff that has seen most G-10 rates rise
  • GBP/USD is trading ~1.2852 after earlier losing as much as 0.4 percent to 1.2831; GBP bulls trimmed positions as speculation built that BOE policy maker Ben Broadbent may shift the balance of voting toward a rate hike at the Bank of England’s next policy meeting
    • Earlier, GBP fell from session high after Broadbent disappointed bulls by offering no views on monetary policy,
  • The Bank of Canada is due to decide on rates Wednesday with markets pricing around a 90% chance of a 25bps hike following recently hawkish rhetoric from Governor Poloz and two of his deputies. The ECB, the fourth horse in the race, meets on policy next week and is expected to keep rates on hold
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