The greenback edged higher for the second consecutive session on Tuesday; the dollar found support from better than expected consumer sentiment to indicate the strength of the U.S economy. However upbeat economic data was overshadowed by the Fed’s upcoming two-day monetary policy meeting starting on Wednesday.
Analysts are expecting the Fed to keep base rates unchanged, yet are anticipating the Fed to shed some light on their plan’s to start monetary tightening and when they plan on starting the smoothing process of the Central bank's balance sheet.
In regards to economic data, the release of upbeat Conference Board Consumer Confidence easing concerns that the U.S economy is slowing down.
Consumer Confidence Index Surged to 16-year highs in July to 121.1, contrary to market expectations of a decline to 116.5 as per the Conference Board announced on Tuesday.
Additionally, the greenback found an unexpected boost from the Whitehouse after the Republican Senate cast their vote to debate Obamacare thus giving president Donald Trump’s health care reform bill a much-needed lifeline.
The US Dollar Index, which measures the strength of the US Dollar against a basket of major currencies edged higher in Tuesday’s session though gains were capped by cautious trade ahead of the Fed’s two-day rate policy meeting. Trading slightly above 12-month lows the dollar index edged higher by 0.11% to trade at 94.08 at the close.
Elsewhere in Great Britain, the sterling pound edged lower against the greenback amid cautious trade ahead of Fed meeting and the upcoming release of United Kingdoms GDP release on Wednesday, the ‘’Cable” edged lower after the IMF changed anticipated GBP growth to 1.7% from 2.0%. The GBP/USD edged the session slightly lower by 0.03% to settle at 1.3024 at the close.
Meanwhile, the European Euro ended Tuesday session slightly higher against the greenback after finding support from better than expected data after German Ifo Business Climate Index rose to 116.0 to beat economist expectation of a decline to 114.9; the EUR/USD edged higher by 0.04% to settle at 1.1646.
Furthermore, in Japan, the Japanese Yen lost some of the gains made in the previous two sessions versus the dollar, after the greenback found support from better than expected consumer data and the revival of President Donald Trump’s Healthcare bill after the senate voted to debate Obamacare. The USD/JPY surged by 0.71% to end the session at 111.88.
Meanwhile, Commodity Based currencies ended Tuesday’s session on mixed notes as the Aussie dollar gained for the second trading session, meanwhile the Kiwi dollar lost on profit taking for the second consecutive trading session. The Australian gains were limited ahead of the release of inflation data on Wednesday; Economists are expecting Inflation to settle at 0.4% Quarter on Quarter and a rise of 2.2% Year on Year. AUD/USD increased by 0.12% to trade near 2-year highs at 0.7937, on the other hand, New Zealand Dollar declined on profit taking for the second successive session. The NZD/USD fell by 0.30% to end the session at 0.7416.
Over in Canda, the loonie dollar ended the session unchanged versus the dollar, as Oil dependent currency found support from surging oil prices to offset the rise of the greenback in today's session The USD/CAD ended the down by 1 pip to settle at 1.2508 at the close.
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