The greenback weakened across the board versus its major peers especially against euro on Tuesday as traders unwound recent long dollar positions ahead of the first U.S. presidential debate between President Trump and former U.S. Vice President Joe Biden scheduled at 01:00GMT on Wednesday.
On the U.S. data front, Reuters reported U.S. consumer confidence rebounded more than expected in September as households' views of the labor market improved. The Conference Board said on Tuesday its consumer confidence index increased to a reading of 101.8 this month from 86.3 in August. Economists polled by Reuters had forecast the index edging up to a reading of 89.5 in September.
Versus the Japanese yen, despite initial dip to session lows of 105.35 shortly after Asian open, price climbed on renewed yen-selling and climbed to a near 2-week high of 105.73 in European morning. The pair retreated to 105.54 in New York morning on profit-taking before rebounding again to 105.70.
The single currency rose initially above Monday's 1.1679 high to 1.1683 at Asian open but retreated on profit taking to 1.1666 in Europe. However, price rallied due to broad-based euro buying to 1.1743 in New York morning before retreating to 1.1710 on profit-taking. Later, renewed buying there pushed the pair higher to an intra-day high at 1.1745 in New York afternoon.
Reuters reported euro zone economic sentiment improved more than expected in September, data showed on Tuesday, mainly thanks to a rise in optimism in the services sector despite concerns about a second wave of the COVID-19 pandemic. The European Commission's monthly survey showed sentiment in the 19 countries sharing the euro rising to 91.1 points this month from 87.5 in August, beating market expectations of an improvement to 89.0 points.
The British pound swung broadly sideways below Monday's 1.2930 high in hectic trading. Despite initial bounce to 1.2882 ahead of Asian open, price ratcheted lower to 1.2835 in Europe and rose to 1.2887 but only to move back to 1.2838. Cable spiked to session highs at 1.2902 on the back of interest rate comments by BOE Governor Adrew Bailey but only to erase intra-day gains and fall back to 1.2824 in New York. Cable later found renewed buying there and rebounded to 1.2868 in New York afternoon.
Reuters reported Bank of England Governor Andrew Bailey said on Tuesday he did not rule out using negative interest rates but that the central bank was realistic about the challenges they would pose for the banking system. Bailey, in an online speech given to Queen's University Belfast, reiterated that the BoE had not yet reached a judgment on whether or when to use sub-zero rates for the first time.
Economic data to be released on Wednesday includes :
Japan industrial output, retail sales, construction orders, housing starts, New Zealand NBNZ business outlook, NBNZ own activity, China NBS non-manufacturing PMI, Caixin manufacturing PMI, manufacturing PMI, Australia building approval, Germany import prices, retail sales, UK GDP, current account, Nationwide house, France consumer spending, CPI (EU norm), CPI, producer prices, Swiss KOF indicator, investment sentiment, Germany unemployment change, unemployment rate, Italy consumer price, CPI (EU norm), EU HICP core HICP, U.S. MBA mortgage application, ADP employment, GDP, core PCE, PCE price index, GDP Deflator, Chicago PMI, pending home sales and Canada GDP, producer prices on Wednesday.
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