Investing.com – The dollar fell against a basket of major currencies on Friday, as investors ditched the greenback amid ongoing U.S. political uncertainty while dovish comments from St. Louis Federal Reserve president James Bullard weighed on sentiment.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.68% to 97.11 by 13:12 EDT.
Political uncertainty has dominated moves in the greenback, which has erased most of the gains achieved since President Trump’s election, as investors started to question whether Trump would be able to deliver on his pro-growth economic agenda in the wake of continued political uncertainty in Washington.
In what a subdued day of top-tier economic data release, investors parsed through somewhat dovish comments from St. Louis Federal Reserve President, James Bullard, on Friday.
Bullard suggested the Fed’s policy path of two more rate hikes this year is “overly aggressive” relative to the pace of recent economic growth.
Bullard’s comments weighed on the dollar but failed to dampened hopes of a June rate hike, as the St. Louis Fed President is not a voting member of the Fed policy committee.
According to investing.com’s Fed rate monitor tool, 70% of traders expect the Federal Reserve to hike interest rates in June.
Meanwhile, EUR/USD soared to $1.1188, up 0.77%, while EUR/GBP tacked on 0.10% to trade at 0.8593, after a bout of positive European data fuelled expectations that the European Central Bank would consider the possibility of tapering its expansive monetary stimulus programme.
GBP/USD rose 0.63% to $1.3022, while USD/JPY traded flat at 111.41.
Meanwhile, a strong rise in oil prices underpinned a move higher in oil-sensitive Canadian dollar but gains were capped by a mixed bag of economic data, after the rate of inflation in April fell short of expectations, while retail sales grew faster than expected.
USD/CAD traded at $1.3540, down 0.46%.