2020.08.1808:02:00UTC+00U.S. Dollar Drops As Treasury Yields Retreat

The U.S. dollar fell against its major counterparts in the Asian session on Tuesday, as softer treasury yields, U.S. political deadlock and disappointing economic data weighed on the currency.

The possibility of Republicans and Democrats agreeing to a fiscal stimulus bill receded as lawmakers went on recess.

Speaker Nancy Pelosi announced Sunday night that she and fellow Democratic leaders are calling the House back into session from a summer recess to defend what they say is Donald Trump's attack on the U.S. Postal Service.

The New York Fed's empire manufacturing index tumbled to 3.7 in August from 17.2 in July. Economists had expected a score of 15 points.

Investors await the release of the Fed's minutes on Wednesday for clues about the policy outlook.

The greenback dropped to a 5-1/2-year low of 0.9037 against the franc from yesterday's closing value of 0.9066. The next possible support for the greenback is seen around the 0.88 level.

The greenback slid to near a 2-week low of 105.40 against the yen, compared to yesterday's New York session close of 106.00. If the greenback falls further, 101.00 is likely seen as its next support level.

The U.S. currency depreciated to near 2-week lows of 1.1906 against the euro and 1.3170 against the pound, down from Monday's closing values of 1.1870 and 1.3103, respectively. The greenback is seen finding support around 1.21 against the euro and 1.34 against the pound.

The greenback that ended yesterday's trading at 1.3214 versus the loonie and 0.7214 against the aussie drifted lower to near a 7-month low of 1.3167 and near a 2-week low of 0.7234, respectively. The greenback is poised to challenge support around 1.30 versus the loonie and 0.75 against the aussie.

In contrast, the greenback edged up to 0.6534 against the kiwi, off its early low of 0.6568. The greenback is likely to challenge resistance around the 0.645 level.

Looking ahead, U.S. housing starts and building permits for July are set for release in the New York session.