The greenback ended the day mixed against its peers on Tuesday as concerns about the delta variant of the Coronavirus triggered risk aversion and as investors remained cautious about slowing U.S. growth.
Reuters reported new orders for U.S.-made goods increased more than expected in June, while business spending on equipment was solid, pointing to sustained strength in manufacturing even as spending is shifting away from goods to services. The Commerce Department said on Tuesday that factory orders rose 1.5% in June after advancing 2.3% in May. Economists polled by Reuters had forecast factory orders increasing 1.0%.
Versus the Japanese yen, dollar remained under pressure after Monday's fall to 109.19 and fell below this level to 109.11 in early European morning on cross-buying in jpy. The pair met renewed selling at 109.24 and dropped in tandem with U.S. yields to a 2-month low at 108.88 in New York.
Source from Reuters, the coronavirus pandemic may have pushed the United States into a volatile era of stronger growth and better productivity, but higher interest rates and faster inflation as well, St. Louis Federal Reserve president James Bullard said, elaborating on why he thinks the U.S. central bank should end its crisis-era policies. "We will have long, lingering effects as the rest of the world recovers. You have shortages and bottlenecks everywhere. You have Europe likely to grow more quickly in coming quarters," Bullard said. "You have industries still adjusting to the post-pandemic world - many things happening, and at a pace we are not used to." In that setting "monetary policy needs to be more nimble."
The single currency traded sideways in Asia and gained to session highs at 1.1893 ahead of New York open. However, the pair then met renewed selling there and fell to session lows at 1.1854 in New York morning due to a broad-based rebound in usd.
The British pound traded with a firm bias in Asia and gained to session highs at 1.3938 ahead of new York open due partly to cross-buying of sterling especially vs euro. However, the pair then erased its gains and fell in tandem with euro to 1.3884 in New York morning before staging a short covering rebound to 1.3918 near the close.
Reuters on the data front, said that the euro zone producer prices accelerated in June, driven by a further surge in energy prices and underscoring the view that inflation in the single currency area has further to rise. The European Union's statistics office Eurostat said on Tuesday that prices at factory gates in the 19 countries sharing the euro rose 1.4% month-on-month for a 10.2% year-on-year increase. The latter figure was little different from the 10.3% average expectation in a Reuters poll of economists and marked a seventh-month rising trend since a 2.0% decrease in November.
Data to be released on Wednesday:
Australia AIG construction index, services PMI, retail sales, New Zealand labour cost index, employment change, unemployment rate, Japan services PMI, China caixin services PMI, France budget balance, Markit services PMI, Italy Markit services PMI, retail sales, Germany Markit services PMI, EU Markit services PMI, retail sales, U.K. Markit services PMI, U.S. MBA mortgage application, ADP employment change, Markit services PMI, ISM non-manufacturing PMI and Canada building permits.
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