NEW YORK: The US dollar rose against most major currencies on Tuesday, bolstered by hawkish comments from a Federal Reserve official as well as better-than-expected economic data in the world’s largest economy that suggested the central bank will not be in a rush to kickstart its rate-cutting cycle.
The greenback firmed against the euro, yen, Swiss franc, sterling, and commodity currencies, such as the Australian and New Zealand dollars.
Further boosting the dollar was a report showing US single-family home prices increased at a steady pace in April, rising 0.2% on the month after being unchanged in March. In the 12 months through April house prices increased 6.3% after advancing 6.7% in March.
US consumer confidence slightly eased in June, with the index at 100.4 from a downwardly revised 101.3 in May, according to the Conference Board. The June number, however, was marginally higher than the market forecast of 100.
The dollar actually extended its gains after the consumer confidence data.
“The weakness in some of the previous data such as retail sales and jobless claims is not really enough to spark an FX rally or dollar weakness,” said Thierry Wizman, global FX and rates strategist at Macquarie in New York.
“For dollar weakness to happen, we’re going to have to see not just some soft data in the US, but also need to see the Fed accelerate its rate cuts. We’re going to have to see a divergence in data that favors the rest of the world.”
Investors are now looking to Friday’s release of the US personal consumption expenditures (PCE) price index - the Fed’s preferred measure of inflation. In late morning trading, the dollar rose 0.1% against the yen to 159.655 yen, clinging to a tight range. Fears of intervention from Japanese officials deterred traders from sharply selling the yen against the dollar and other currencies.
Traders remained wary of testing the 160 level that prompted a 9.79 trillion yen ($61.33 billion) currency intervention from Tokyo in late April and early May.
“The market is showing ... that they are nervous, and they are very much on edge about this situation,” said Chris Weston, head of research at Pepperstone.
The latest decline in the yen has come on the back of the Bank of Japan’s (BOJ) June policy meeting, where policymakers disappointed investors who were betting on an immediate reduction of the BOJ’s massive bond purchases.
In the broader market, the euro slid 0.3% versus the dollar to $1.0698. It has come under pressure amid political turmoil in France in the wake of President Emmanuel Macron’s shock snap election call earlier this month.
Against a basket of currencies, the dollar index was up 0.2% at 105.72.
Sterling was flat to slightly lower against the dollar at $1.2681, while the Australian dollar fell 0.3% to A$0.6638.
China’s yuan was little changed against the US currency, weakening to 7.2631 per dollar earlier and within sight of the lower end of the central bank’s daily trading limit of 7.265 on Tuesday.
The yuan has never breached this threshold.
Politics was also at the forefront of investors’ minds, with the first US presidential debate between President Joe Biden and his predecessor Donald Trump set for Thursday and French elections due to begin this weekend.
In crypto currencies, bitcoin gained ground after its worst day in more than two months at the start of the week, in part due to flows out of bitcoin exchange-traded funds (ETFs), analysts said. Bitcoin was last up 4% at $61,809.
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