Dollar erased initial gain and falls broadly in New York: May 31, 2017

Market Review - 30/05/2017  23:22GMT  

Dollar erased initial gain and falls broadly in New York

The greenback ended the day lower against majority of its peers on Tuesday on risk aversion due to political worries in Europe together with release of weak U.S. consumer confidence data after making earlier gains in Asia and European morning. 

Versus the Japanese yen, although dollar tumbled to 110.78 in Asian morning on risk averse buying of yen, price pared its losses and rebounded to 111.12 in early European morning, then higher to 111.23 at New York open. However, the greenback met renewed selling there after the release of weak U.S. consumer confidence data and fell to session lows of 110.67 near New York midday before staging a minor recovery. 

The Conference Board, a market research group, said its index of consumer confidence declined to 117.9 this month from a reading of 119.4 (revised from an initial 120.3) in March. Analysts had expected the index to fall to 119.8 in April. 

Although the single currency remained under pressure in Asia and dropped to session low at 1.1110 at European open on concern over Greek bailout programme, price quickly pared intra-day losses and rallied to 1.1194 ahead of New York open, then higher to an intra-day high at 1.1206 in New York morning before moving broadly sideways in New York afternoon. 

The British pound also remained under pressure and dropped to session low at 1.2794 in Asian morning, however, cable pared its losses and rallied in tandem with euro to 1.2871 in European morning, then higher to an intra-day high at 1.2888 in New York morning after a recent poll showed a narrowing Conservative lead. Price later traded narrowly in tandem with eur/usd before tumbling in early Australian trading to 1.2791 on Wednesday when latest poll result showed U.K. May's Conservative party may lose majority in the Parliament. 

ICM Poll stated 'UK opposition Labour party on 33% vs 33% last week ahead of Jun 8 election; UK Conservatives' lead at 12 pts vs 14 pts last week ahead of Jun 8 election.' 

In other news, Fed's Kaplan said 'I see two more rate hikes for 2017; balance sheet should be substantially less than it is today; I am concerned about the recent economic data; still believe we can grow at 2 percent this year; tight labor market should boost inflation; tax reform cud be helpful; correction in the stock mkt cud be healthy; bond mkt seeing sluggish growth.' 

On the data front, the Commerce Department said that personal spending increased 0.4% in April from the prior month, in line with expectations and the higher than March's 0.3% gain that was revised up from a flat reading. 

Data to be released on Wednesday: 

Japan industrial production, construction orders, housing starts, China manufacturing PMI, Germany import price index, retail sales, unemployment rate, France HICP, PPI, Italy PPI, UK consumer confidence, shop price, mortgage approvals, EU CPI, unemployment rate, Canada GDP, U.S. redbook and pending home sales.