The US dollar has opened the new trading week on the back foot with the US dollar index (DXY) sliding to a fresh two-month low.
It currently trades at 99.353, down 0.28% for the session.
From the more than decade high of 103.82 struck on January 3, the DXY has now lost close to 5%. Traders will now be eyeing the 99.233 level, the low the DXY hit on February 2 this year.
Helping to explain the weakness, the two largest constituents within the DXY — the euro and Japanese yen — are both pushing higher in thin trade, adding 0.45% and 0.64% respectively.
There has been no news to explain the move, although some have put it down to nervousness over the ability of the Trump administration to push through tax reforms given the failure for House Republicans to garner enough votes to repeal Obamacare on Friday.
“A far more important question is how this failure, and what it means for the passage of other policy proposals, will affect wider economic sentiment,” said economists at ANZ on Monday morning.
“In theory, policy gridlock such as this was meant to be far harder to occur at a time when one party controlled the Presidency and both houses. But it clearly highlights that divides remain, and it means that the policy paralysis that was often evident over recent years could linger.
“For markets, that doesn’t sound like an ideal situation. Not only would they then be grappling with unwinding some of the euphoria priced in by Trump’s fiscal plans, but also dealing with the possibility of a softening tone in some of the underlying economic data.”
In early trade on Monday, it appears that those doubts are coming to the fore once again in the absence of any meaningful news, seeing the once high-flying greenback continue to unwind.
Along with helping to boost the euro and yen, it’s also helping to provide a modest boost to other currencies such as the Australian and New Zealand dollars — generally regarded as being more sensitive to investor sentiment — which have added 0.05% and 0.14% respectively.