The dollar (CURRENCY:USD) is under renewed pressure in the market, after days of gains against a basket of other major currency. A big economic data miss compounded by geopolitical tensions between the U.S and North Korea appears to have spooked the market fueling a selloff in the greenback.

Causes Of Dollar Weakness

Concerns over the Donald Trump Administration ability to implement key economic policies also continues to compound pressure on the dollar. The popular currency opened the Monday trading session on the defensive mode as traders reacted to events over the weekend.

The Dollar Index, which measures the greenback’s strength against six other major currencies traded lower at 99.226. Against the Yen (USDJPY), the greenback was trading at lows of 113.16, the Euro (EURUSD) having edged higher to 1.0946. The pound (GBPUSD) which has been on the receiving end also came to life soaring to highs of 1.2914 during the European session.

North Korea confirming it had successfully tested a new mid-to-long range missile that landed in the sea near Russia appears to have spooked the market. Washington has already termed the launch as a warning to South Korea especially with a new president taking over.

However, Retail sales data report on Friday showing that sales increased by 0.4% compared to market expectations of a 0.6% gain all but continues to raise concerns about the U.S economy. Disappointing consumer prices also appears to have fuelled the selloff wave.

 Week Ahead

Long positions on the dollar fell to their lowest level since early October as investors continue to scatter to other safe havens. However, the Federal Reserve is still expected to hike interest rates at the next meeting in June given that the markets expect two more hikes before the end of the year.

Looking at the week ahead, the U.S is set to release a report on manufacturing activity around New York on Monday, which traders should use to further gauge the strength of the U.S. economy. Building permits housing stats and industrial production report will hit the wires on Tuesday expected to have an impact on the dollar strength depending on its outcome.

U.S. initial jobless claims and manufacturing activity in the Philadelphia area should light the markets on Thursday seen as a potential market mover.