Dollar losses build as Trump crisis fuels fears for agenda

Dollar losses build as Trump crisis fuels fears for agenda While the White House has denied any wrongdoing over claims Donald Trump urged then-FBI director James Comey to drop a probe, markets are worried it could throw the president's agenda off-track

The dollar sank Wednesday with a fresh crisis in the White House fuelling concerns that Donald Trump's economy-boosting agenda could be run off-track.

The administration was once again rocked by allegations over its links to Russia after it emerged the tycoon had divulged classified information to the nation's foreign minister.

That was followed late Tuesday by claims by recently fired FBI boss James Comey that Trump pressed him to drop a probe into ex-national security advisor Michael Flynn over his links to Moscow.

While the Oval Office has furiously denied any wrongdoing, there is a growing sense of crisis that could even lead to the president's impeachment, throwing into doubt his plans for tax cuts, big spending and red tape slashing.

Bets that the plan would fire the economy helped fan a dollar and global equities rally in the months after Trump's election.

"There has been a lot of focus on the US president who admitted that he did share information with Russia," said Greg McKenna, chief market strategist at AxiTrader.

"But what's potentially important for markets in the weeks and months ahead is that the president's apparent missteps may galvanise his opponents, which could make it harder to implement his economic agenda."

- Difficult to buy -

The dollar took a beating in New York and extended the losses Wednesday. The euro broke above $1.11 to levels not seen since Trump's election win in November, while the yen is also piling pressure on the US unit. The dollar bought 112.30 yen, well down from levels above 114 yen seen last week.

"At the very least the view is that Trump’s economic policies will be delayed over this, and the dollar is being sold," Tomohiro Kubota, an analyst at Matsui Securities in Tokyo, told Bloomberg News.

"At the moment there’s a strong sense of investors trying to gauge how far this will go. It’s a situation where you can’t completely rule out the possibility of impeachment down the road, so it’s difficult for investors to buy."

A series of below-par economic readings out of Washington are also adding to dollar selling, while the euro is growing more attractive as political uncertainty in Europe abates and indicators point to a healthy pick-up in growth.

On equities markets Tokyo ended down 0.5 percent as the stronger yen weighed on exporters, while Hong Kong gave up 0.2 percent and Shanghai closed 0.3 percent lower.

Sydney shed 1.1 percent, Seoul sank 0.1 percent, and Singapore, Taipei and Jakarta also retreated.

The losses came despite another record close in London and New York.

In early European trade London dipped 0.3 percent, while Paris shed 0.6 percent and Frankfurt gave up 0.8 percent.

- Key figures around 0720 GMT -

Tokyo - Nikkei 225: DOWN 0.5 percent at 19,814.88 (close)

Hong Kong - Hang Seng: DOWN 0.2 percent at 25,286.44

Shanghai - Composite: DOWN 0.3 percent at 3,104.44 (close)

London - FTSE 100: DOWN 0.3 percent at 7,496.66

Euro/dollar: UP at $1.1116 from $1.1084 at 2100 GMT

Dollar/yen: DOWN at 112.30 yen from 113.07 yen

Pound/dollar: UP at $1.2922 from $1.2918

Oil - West Texas Intermediate: DOWN 26 cents at $48.40 per barrel

Oil - Brent North Sea: DOWN 21 cents at $51.44 per barrel

New York - Dow: DOWN less than 0.1 percent at 20,979.75 (close)