Dollar retreats broadly on profit taking after weak U.S. data: Oct 26, 2016

Market Review - 25/10/2016  23:10GMT  

Dollar retreats broadly on profit taking after weak U.S. data

Although the greenback resumed its recent ascent against majority of its peers on Tuesday as speculations of a Federal Reserve rate hike continued to support the buck, release of weaker-than-expected U.S. consumer confidence triggered broad-based long liquidation in New York afternoon.  
  
Versus the Japanese yen, the greenback traded with a firm bias in Asia and Europe before rising to a fresh 2-month peak at 104.87 in New York morning on dollar's broad-based strength. Later, price pared its gains and retreated to 104.12 on profit-taking.  
  
The single currency traded sideways in Asia and briefly rose to 1.0894 on the release of upbeat German Ifo data, however, renewed selling there pressured the pair lower and price dropped to an intra-day low at 1.0851 in New York morning on dollar's strength before gaining to session high at 1.0904 in New York afternoon.  
  
The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 firms, rose to 110.5 in October from 109.5 in September.  
  
The British pound also traded sideways in Asia and edged up to 1.2243 in European morning before tumbling to as low as 1.2082 in New York morning as renewed concerns over Brexit triggered a broad-based selling of sterling. Later, cable pared its losses and staged a short-covering rebound to 1.2207 on comments from Bank of England's Carney.  
  
In other news, BoE's Carney said 'monetary policy has been the principle if not sole vehicle to provide stimulus to UK; monetary policy has in many respects been overburdened; welcome that gov't is signalling resetting of balance between monetary, fiscal n structural policy; risk premium wud be most prominent on ccy, also in gilt mkts n inflation expectations; mkts shud have reason to see risk premium on UK assets; lawmerks' comments on BoE policy have no eddect on how BoE discharges its responsibility; BoE will not change how it conducts monetary policy unless parliament changes its remit; stance of monetary policy has supported UK economy during diffcult period of adjustment; central bank operational independence has stood the test of time.'  
  
On the data front, the Conference Board, a market research group, said its index of consumer confidence fell to 98.6 this month from a reading of 103.5 in September, whose figure was revised from a previously reported 104.1. Analysts had expected the index to drop to 101.0 in September.  
  
Data to be released on Wednesday:  
  
Australia CPI, Germany consumer sentiment, France consumer confidence, Italy retail sales, UK mortgage approvals, U.S. trade balance, services PMI and new home sales.