NEW YORK (Reuters) - The dollar fell against a basket of major currencies on Tuesday, after U.S. President Donald Trump's eldest son released an email chain citing Russian support for his father before last year's U.S. election.
Donald Trump Jr. was told a Russian prosecutor was offering his father's presidential campaign incriminating information about Democratic rival Hillary Clinton as part of Russian government support, according to an email chain that he released on Tuesday.
"At the very least, these types of headlines play up concerns about dysfunction in Washington and the inability of this administration to pass any meaningful legislation, particularly related to fiscal stimulus," said Omer Esiner, chief market analyst at Commonwealth FX in Washington.
The dollar index <.DXY>, which tracks the greenback against six major rivals, turned negative on the day to fall to a more than one-week low of 95.673. The index was down 0.31 percent.
"The Russian investigation has probably been the biggest mark against the Trump administration, and the more we get to know the more the markets gets concerned," said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
Investors are waiting for U.S. Federal Reserve Chair Janet Yellen's semi-annual monetary policy testimony before Congress on Wednesday and U.S. consumer inflation data on Friday.
Meanwhile, Fed Governor Lael Brainard said the Fed should soon begin reducing its balance sheet, as long as economic data on U.S. jobs and growth holds up. Once balance sheet reduction is under way, she will assess inflation before deciding on further interest rates rises, she said.
"Brainard's comments are not helping the dollar much either," Esiner said.
The greenback, which touched a four-month high against the Japanese yen earlier in the session spurred by the recent rise in U.S. government bond yields, reversed course to fall 0.09 percent to 113.93 yen. The euro rose to a more than one-year high of $1.1475.
The Canadian dollar <CAD=> slipped against its U.S. counterpart as traders awaited an interest rate hike decision by the Bank of Canada on Wednesday.
The greenback gained against the New Zealand dollar as rising U.S. yields, soft commodity prices and a disappointing report on domestic credit card spending sent investors fleeing kiwi assets.
Sterling fell to an eight-month low against the euro after the Bank of England Deputy Governor Ben Broadbent declined to back up recent hints from other policymakers at the central bank that suggested it may be moving towards raising interest rates.
(Reporting by Saqib Iqbal Ahmed; Editing by Richard Chang)
