Dollar ends lower on return of risk sentiment as US stocks rise to record highs
|The greenback ended the day lower against majority of its peers, except versus Japanese yen on Tuesday on return of risk appetite due to optimism that Covid-19 vaccines will be rolled out soon together with U.S. President Donald Trump's acceptance of the transition to a Joe Biden presidency as well as the Dow Jones and S&P closed at record highs. (Dow ended the day at 30,046 up by 454 points or 1.54%)
On the data front, Reuters reported U.S. consumer confidence fell more than expected in November likely as a widespread surge in new COVID-19 infections and business restrictions outweighed encouraging news on vaccines. The Conference Board's consumer confidence index dropped to a reading of 96.1 this month from 101.4 in October. Economists polled by Reuters had forecast the index falling to a reading of 98 in November. The index was at 132.6 in February.
Versus the Japanese yen, dollar extended Monday's winning streak and gained to 104.64 at Asian open due to overnight rally in U.S. stocks. However, lack of follow-through buying triggered profit-taking and price tumbled to session lows at 104.15 in European morning. The pair then erased intra-day losses and rallied to 104.75 in New York morning before weakening again to 104.43 near the close on renewed usd's weakness.
The single currency traded with a firm bias in Asia and jumped in early European morning due to the rise in European bourses and gained to 1.1893 in Europe on return of risk sentiment. However, price then pared intra-day gains and retreated to 1.1842 in New York due to usd's rebound but only to rise again to 1.1896 near the close as the Dow and S&P closed at record highs.
Reuters reported the European Central Bank should consider copying the U.S. Federal Reserve's new inflation target and aim to make up for lost price growth after undershooting its aim, Finnish policymaker Olli Rehn said on Tuesday. Rehn praised this strategy and argued that the ECB needed to make its own "below but close to 2%" target genuinely symmetric and clarify that it would be sufficiently forceful if price growth deviates from its target in either directions.
The British pound also traded with a firm bias in Asia and jumped to session highs at 1.3380 in European morning on return of risk sentiment. However, price then dropped to 1.3294 in New York due a broad-based rebound in usd but only to rebound strongly to 1.33604 on rise in U.S. stocks.
Data to be released on Wednesday:
Australia construction work done, Swiss investor sentiment, U.S. mortgage applications, building permits, personal income, personal spending, core PCE index, durable goods, GDP, goods trade balance, wholesale inventories, initial jobless claims, continued jobless claims, University of Michigan consumer sentiment, new home sales and FOMC minutes.
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