Dollar tumbles to five-week lows as Trump trade loses steam

NEW YORK, Jan 12 (Reuters) - The U.S. dollar hit its lowest level in five weeks against a basket of major currencies on Thursday and was on course for its worst week since November, hit by a loss of confidence in the U.S. reflation trade a day after a news conference by U.S. President-elect Donald Trump.

Speculators had driven the dollar index, which measures the greenback against a basket of six major currencies, to a one-week high Wednesday in anticipation that Trump's first news conference since his Nov. 8 victory would give more detail on new fiscal spending and tax measures to repatriate U.S. corporate capital held overseas.

Instead, the event was dominated by debate over Russian hacking and unsubstantiated claims that he had been caught in a compromising position in Moscow. The dollar index tumbled to 100.720 Thursday after touching, its weakest since Dec. 8 after touching 102.950 before the news conference Wednesday.

"Mr. Trump disappointed in not providing deeper details on his policy platform," said Joe Manimbo, senior market analyst with Western Union Business Solutions in Washington.

See photos of Trump's first press conference:

17 PHOTOS
President-elect Trump's first press conference since election win
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President-elect Trump's first press conference since election win
U.S. President-elect Donald Trump speaks during a press conference in Trump Tower, Manhattan, New York, U.S., January 11, 2017. REUTERS/Shannon Stapleton
A member of the media waits for U.S. President-elect Donald Trump speaks during a news conference in the lobby of Trump Tower in Manhattan, New York City, U.S., January 11, 2017. REUTERS/Lucas Jackson
US Vice President-elect Mike Pence speaks during a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
U.S. President-elect Donald Trump takes questions from members of the media during a press conference at Trump Tower in New York, U.S., on Wednesday, Jan. 11, 2017. Trump vigorously denounced unsubstantiated reports that the Russian government has gathered potentially damaging information about his finances and conduct. Photographer: John Taggart/Bloomberg via Getty Images
NEW YORK, NY - JANUARY 11: President-elect Donald Trump arrives at a news cenference at Trump Tower on January 11, 2017 in New York City. This is Trump's first official news conference since the November elections. (Photo by Spencer Platt/Getty Images)
US President-elect Donald Trump arrives to give a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
U.S. President-elect Donald Trump, second right, stands with son Donald Trump Jr. right, and daughter Ivanka Trump prior to a press conference at Trump Tower in New York, U.S., on Wednesday, Jan. 11, 2017. Trump vigorously denounced unsubstantiated reports that the Russian government has gathered potentially damaging information about his finances and conduct. Photographer: John Taggart/Bloomberg via Getty Images
Numerous files are displayed (L) as US President-elect Donald Trump gives a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
US President-elect Donald Trump gives a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
US President-elect Donald Trump gives a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / Don EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
People watch from a balcony as US President-elect Donald Trump gives a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / Don EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
U.S. President-elect Donald Trump speaks during a news conference in the lobby of Trump Tower in Manhattan, New York City, U.S., January 11, 2017. REUTERS/Lucas Jackson
US President-elect Donald Trump Chief Strategist Steve Bannon is seen during a press conference January 11, 2017 in New York. Donald Trump is holding his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)
US President-elect Donald Trump along with his children Eric(L) Ivanka and Donald Jr. arrive for a press conference January 11, 2017 at Trump Tower in New York. Trump held his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
US President-elect Donald Trump speaks during a press conference January 11, 2017 at Trump Tower in New York. Trump held his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
NEW YORK, NY - JANUARY 11: President-elect Donald Trump speaks at a news cenference at Trump Tower on January 11, 2017 in New York City. This is Trump's first official news conference since the November elections. (Photo by Spencer Platt/Getty Images)
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The dollar index had gained 4 percent between Trump's election victory and Wednesday on expectations that his promised policies would boost inflation and encourage the Federal Reserve to raise interest rates. The index is on track to fall 1.3 percent this week to mark its worst week since that ended Nov. 4.

The dollar weakened as much as 1.4 percent against the yen to 113.76 yen, its weakest level in five weeks, while the euro hit its highest in five weeks against the dollar of $1.0684 . Sterling hit a six-day high against the dollar of $1.2317, rebounding from a three-month low of $1.2038 touched Wednesday before Trump's news conference.

Even the Mexican peso rebounded against the greenback. The dollar was last down 0.7 percent against the peso at 21.7075 pesos. The peso broke the 22 peso-per-dollar mark for the first time on Wednesday and hit a record low of 22.0440 pesos after Trump said U.S. auto companies would face a high tax for products made south of the border during the press conference.

Analysts said it was unclear how long the dollar weakness would last.

"For the moment, I would stop short of drawing broader conclusions. I think (Trump) will still implement his policy platform," said Lee Hardman, a currency economist with Japan's MUFG in London. (Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Bill Trott)

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Markets

NASDAQ 6,997.20 60.62 0.87%
S&P 500 2,692.07 16.26 0.61%
DJIA 24,784.27 132.53 0.54%
NIKKEI 225 22,901.77 348.55 1.55%
HANG SENG 29,050.41 202.30 0.70%
DAX 13,312.30 208.74 1.59%
USD (per EUR) 1.18 0.01 0.42%
USD (per CHF) 0.99 -0.01 -0.56%
JPY (per USD) 112.47 -0.25 -0.22%
GBP (per USD) 1.34 0.01 0.60%

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