The dollar extended losses against the yen and the Swiss franc on Thursday as investors feeling increasingly nervous over the future of Donald Trump’s U.S. presidency sought safe havens for their money.
After some signs of stability in Asia, dollar selling resumed in the European morning as Reuters reported that investigators were looking at records of numerous undisclosed contacts between the Trump campaign and Russian officials.
The franc, a traditional destination for capital in times of financial or political stress, hit a 10-day high against the euro and its strongest since Trump’s election last November against the dollar.
The yen, which saw its biggest daily gain against the dollar since last July on Wednesday, gained another 0.4 percent to 110.24 yen.
“Risk aversion is rife once again with the brewing political storm surrounding President Trump in the U.S. largely being blamed,” said Craig Erlam, a market analyst with retail broker Oanda in London.
“While I don’t believe at this stage that these reports regarding Trump will jeopardize his agenda, markets must reflect the challenges he now faces.”
The dollar surged late last year on the assumption that Trump would boost U.S. growth and inflation with a combination of tax cuts and spending while also encouraging repatriation of foreign-held corporate capital to the United States.
That faith has steadily evaporated in 2017 as he struggled to deliver on promises of “phenomenal” tax reform and a new healthcare bill, and rows over other parts of the administration erupted.
Meanwhile, a run of downbeat U.S. economic data in the past month has weakened expectations for further rises in Federal Reserve interest rates this year