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Forex - Dollar index pares gains amid U.S. political turmoil

Investing.com -

Investing.com - The dollar pared gains against other major currencies on Wednesday, as investors continued to eye political developments in the U.S., as well as Thursday's U.K. election and the European Central Bank's policy decision.

EUR/USD was steady at 1.1278, off session lows of 1.1204 hit following reports the ECB plans to cut inflation forecasts for the next three years.

The news added to expectations that the ECB could strike a less dovish tone at its meeting on Thursday after recent economic reports indicated that the recovery in the euro area is deepening.

Meanwhile, sentiment on the greenback remained fragile ahead of former FBI Director James Comey's testimony to a Senate committee on Thursday.

Investors are fearful that the Trump administration may be further damaged by any revelations that could emerge when Comey testifies about Russia's alleged involvement in the U.S. election.

GBP/USD gained 0.36% to 1.2960.

While pollsters still expect British Prime Minister Theresa May to win the most seats in the Thursday election, a tight result could throw the country into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.

USD/JPY slipped 0.13% to 109.26, while USD/CHF eased up 0.09% to trade at 0.9629.

The Australian and New Zealand dollars were stronger, with AUD/USD up 0.71% at 0.7559 and with NZD/USD rising 0.24% to 0.7201.

The Australian Bureau of Statistics earlier said gross domestic product rose 0.3% in the first quarter, beating expectations for an uptick of 0.2% and after a growth rate of 1.1% in the last quarter of 2016.

Meanwhile, USD/CAD gained 0.32% to 1.3498 after Statistics Canada reported that building permits fell 0.2% in April, compared to expectations for an increase of 2.4%.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was little changed at 96.53, close to Tuesday's seven-month low of 96.47.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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