Dollar remains under pressure

Dollar remains under pressure after Trump fires FBI chief

The dollar traded roughly flat against a basket of major currencies on Wednesday, as investors reacted negatively to President Trump’s decision to fire FBI Director James Covey.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.01% to 99.46 by 12:52 EDT.

In what was quiet day for top-tier economic data release, investors questioned whether Trump’s abrupt dismissal of FBI Director, James Comey, could prove a distraction and delay the Trump administration’s economic agenda.

The New York times reported that days before he was fired, Comey asked the Justice Department for additional resources for the bureau’s investigation into Russia’s interference in the presidential election.

Despite the dip in the dollar, sentiment remained bullish, as investors anticipate that the Federal Reserve will increase its benchmark rate in June, after a flurry of hawkish comments from Federal Reserve Officials.

Dallas Federal Reserve Bank President Robert Kaplan reiterated his view on Tuesday, that three total rate hikes in 2017, is the “baseline scenario” and insisted that the Fed would continue to monitor changes in economic activity, which could pave the way for a more hawkish or dovish approach to future rate hikes.

Meanwhile, Boston Fed President Eric Rosengren suggested that faster interest rate hikeswould be needed should unemployment continue to drop below the level of “natural employment” and cause the economy to overheat.

According to investing.com’s Fed rate monitor tool, nearly 80% of traders expect the Federal Reserve to hike interest rates in June, compared to 63% in the previous week.

Elsewhere, the EUR/USD traded flat at $1.0872, while EUR/GBP dipped 0.05% to 0.8403, after European Central Bank President Mario Draghi said on Tuesday it was too early for the ECB to suggest that Eurozone inflation had met objectives.

GBP/USD traded slightly above breakeven at $1.2938, as investors turned attention to the Bank of England’s quarterly report scheduled for Thursday, which will include its economic outlook, latest interest rate decision and minutes from the most recent policy meeting.

USD/JPY traded at 114.10.22, up 0.09% while USD/CAD fell 0.49% to $1.3653.