Dollar rises as Fed meeting gets under way The U.S. dollar moved higher versus the euro and the Japanese yen Tuesday, extending a modest gain in the wake of data that showed consumer confidence fell more than expected in July while the Federal Reserve began a two-day monetary-policy meeting. The ICE dollar index DXY +0.01% , a gauge of the greenback’s movement against six other major currencies, changed hands at 81.815, up from 81.663 late Monday in North America. The WSJ Dollar Index XX:BUXX +0.01% , which measures the currency’s moves against a slightly wider basket, rose to 74.11, up from Monday’s 73.91 closing level. The dollar, however, “may struggle to hold its ground over the next 24 hours of trading as the advance [gross domestic product] report is expected to show the world’s largest economy growing at a slower pace in the second quarter,” said David Song, currency analyst at DailyFX. “At the same time, there’s growing speculation that the [Fed’s policy committee] will shift the forward-guidance in favor of its highly accommodative policy stance, and we may see a sharp selloff in the greenback should the committee reduce the thresholds for unemployment and inflation.” On the other hand, more central bankers could be prepared to turn more upbeat about prospects for a faster recovery in the second half of the year, and the dollar could benefit if the Fed’s policy statement lays out a more detailed exit strategy, Song said. The euro EURUSD +0.01% bought $1.3265, little changed from its level in North American trade late Monday, while the British pound GBPUSD +0.01% fell to $1.5242 from $1.5349. Earlier, the Conference Board said its U.S. July consumer-confidence index fell to 80.3 from an upwardly-revised 82.1 in June. Economists had forecast a reading of 81.1. The dollar brushed off the data. The reading still leaves the index near highs seen ahead of the worsening of the financial crisis in 2008, said Annalisa Piazza, economist at Newedge Strategy in London. The Australian dollar AUDUSD +0.08% remained one of the day’s biggest movers, dropping to 90.64 U.S. cents to lose more than a full penny from late Monday’s level of 92 cents. The Aussie extended losses after Reserve Bank of Australia Gov. Glenn Stevens said in a speech that the current pace of inflation wouldn’t deter the central bank from cutting interest rates further. Disappointing Australian June building-approvals data prompted an earlier wave of selling, said Elsa Lignos, currency strategist at RBC Capital Markets. The data showed approvals fell 6.9% in June, defying forecasts for a rise, while May data was revised lower. “Approvals continue to move higher in trend terms, but the upswing remains modest and confirms that the rotation from mining/resources capex to the non mining sectors of the economy remains challenging,” Lignos said. The ICE dollar index had lost more than 3% since hitting its most recent high on June 9. The pullback was spurred by speculation about when the Fed will begin tapering its bond purchases and by subsequent comments from Fed Chairman Ben Bernanke about interest rates staying low for an extended period.
Posted on: Tue, 30 Jul 2013 22:50:59 +0000
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