The dollar edged up from its lowest level in more than a year on Monday, assisted by stronger-than-expected readings on the US economy, as investors continued to watch developments on US President Donald Trump's inner circle's possible ties to Russia. The dollar rose against a basket of six major currencies, bouncing off a 13-month low touched in early trading.
Trump's son-in-law and senior advisor Jared Kushner released a statement ahead of a meeting with Senate and House Intelligence Committees denying he had colluded with Russians. Market participants say the ongoing investigation has been an albatross to pushing through Trump's pro-growth agenda of tax cuts and infrastructure spending. Further developments in the investigations, as well as weak US economic data and reduced inflation expectations, have weighed on the dollar for much of the month. Speculators' bets on the dollar swung to a net short for the first time in more than a year last week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. On Monday, Markit's manufacturing and services flash surveys both showed the US beating expectations. Having exceeded a number of important technical levels last week, investors are now looking to reprice the dollar in the current environment, particularly on the dollar/euro trade, analysts said.
"When we start trading at this relatively unknown area for the dollar and euro you're starting to look for ... whether there could be a selloff and some profit taking," said John Doyle, director of markets at Tempus Inc in Washington.
The dollar index was last trading 0.15 percent higher at 94.006. The euro has the largest weighting in the dollar index's basket, at more than 50 percent. The single currency had earlier on Monday risen to a 23-month high against the dollar as investors remained bullish after the latest business growth data for July pointed to only a mild slowdown, suggesting the euro-zone economy was still growing at a relatively strong clip. The euro was last trading at $1.1634, slightly below a high of $1.1684 hit earlier in the day, its highest since August 2015.
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