Dollar Extends Slide Against Peers

0
56

The U.S. dollar stayed weak against its major rivals on Tuesday, extending recent losses, as comments from Fed officials suggested the central bank will continue to hold interest rates lower despite inflationary pressures.

After comments from several Fed officials last week, Dallas Fed Bank President Robert Kaplan said on Monday that a rate hike is unlikely to happen until next year.

Federal Reserve Vice Chair Richard Clarida said during a webinar that the weaker-than-expected April payroll report showed the U.S. economy had not yet reached the threshold to warrant scaling back the central bank’s massive bond purchases.

Traders now look ahead to the minutes of the central bank’s latest policy meeting for insight about policymakers’ view on inflation and hints on when it might consider tapering of its QE program.

Disappointing data on U.S. housing starts weighed as well on the currency. data from the Commerce Department showed housing starts in the U.S. tumbled 9.5% to an annualized rate of 1.569 million in April, sliding from a 15-year high of 1.733 million recorded a month earlier. Economists had expected housing starts to come in at 1.71 million in April.

Another data from the Commerce Department showed building permits in the U.S. rose by 0.3% to 1.76 million in April, from the previous month’s 1.755 million. Economists had expected building permits to rise to 1.77 million in April.

The dollar index dropped to 89.69 in early New York session. It was last seen hovering around 89.80, down about 0.4% from the previous close.

Against the Euro, the dollar weakened to 1.2223, down 0.6%. The euro zone economy shrank by 0.6% sequentially in the three months to March of 2021, the second estimate showed – matching expectations. Year-on-year, the bloc’s GDP dropped by 1.8% in the first quarter.

Separately, the region’s employment fell by 0.3% and 2.1% on sequential and annual basis, respectively in the first quarter of 2021.

The Pound Sterling firmed up against the dollar, fetching $1.4188, compared with $1.4138 Monday evening. Britain’s unemployment rate unexpectedly ticked lower in the first quarter despite the national lockdown, according to figures released by the Office for National Statistics.

The jobless rate fell 0.3 percentage points to 4.8% in the first quarter. This was also below economists’ forecast of 4.9%. At the same time, the employment rate was estimated at 75.2%, up 0.2 percentage points from the previous quarter.

The Yen firmed up to 108.89 a dollar, gaining from 109.23 on Monday. Japan’s gross domestic product contracted an annualized 5.1% in the first quarter of 2021, the Cabinet Office said in its preliminary report.

That missed expectations for a decline of 4.6% following the downwardly revised 11.6% increase in the previous three months (originally 11.7%).

The Aussie was stronger with the AUD-USD at 0.7791, gaining 0.35%.

The Swiss franc strengthened to 0.8978 a dollar, rising 0.65%, while the Loonie was up slightly at 1.2061 a dollar.

The material has been provided by InstaForex Company – www.instaforex.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here