The dollar weakened against its peers today coming off session highs on the back of a decline in US consumer confidence in July while markets anticipated tomorrow’s policy statement from the Federal Reserve. US consumer confidence index dropped from an amended reading of 99.8 in June to 90.9 in July while experts had expected an uptick to 100.0. Data revealed that investor outlook had deteriorated as a result of dampened prospects for the labor market along with doubt and volatility in financial markets triggered by issues in Greece and China. Fed Chair Yellen previously indicated that interest rates could be increased as early as September if the US economy continues to strengthen as forecast.
The euro weakened against the dollar with the pair down 0.33% trading at 1.1051 off its 2 week high of 1.1128 set on Monday. The pair had come off its session low of 1.1022 leading up the release of US data after which the euro trimmed its losses. The euro is expected to strengthen further against the dollar while continuing to be volatile as Greece forges ahead with bailout talks and its government faces criticism over a plan to leave the euro zone.
The pound strengthened against the dollar with the pair up 0.26% trading at 1.5601 coming off its session high of 1.5627 after rebounding from its session low of 1.5527 leading up to the release of UK GDP data and the Fed’s policy statement. UK GDP grew by 0.7% in the 2nd quarter after a 0.4% expansion in the 1st quarter matching forecasts. The pound was also stronger against the euro.
The yen weakened against the dollar with the pair climbing 0.25% trading at 123.55 rebounding off lows of 123.00 reached on Monday. The pair had reached a session high of 123.79, its highest level since July 24, with today’s range of less than 1 big figure. The continuing selloff in Chinese equity markets has also supported the dollar while lessening the market’s appetite for riskier assets.
The Australian, New Zealand and Canadian dollars strengthened against the greenback. The Aussie was up 0.63% against the dollar with the pair trading at 0.7314 coming off its 6 year low reached last week. The Aussie has been pressured by volatility in Chinese equity markets as a result of Australia’s close trading ties with China. The kiwi surged 1.14% against the dollar with the pair trading at 0.6679. The kiwi was stronger against the Aussie. The loonie gained 0.36% against the dollar with the pair trading at 1.2991 however the greenback’s losses were curtailed its demand was supported leading up to the Fed’s statement tomorrow.
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