The dollar gives up a two-month peak ahead of US consumer confidence data
The US dollar fell in the European market on Tuesday for the first time in the last seven days, to give up the highest level in two months recorded in earlier in the day’s trading, in light of the activity of correction and profit-taking operations. This decline comes before the release of important data on consumer confidence in the United States this month. The weak data deepens the current losses in the US currency levels.
The dollar index fell by 0.4% to the level of 103.90 points, from the opening level of today’s trading at 104.30 points, with the highest level was recorded at 104.53 points, the highest since March 20. Yesterday, the index rose by less than 0.1%, in the sixth consecutive daily gain, within the longest series of gains daily during this year, thanks to the high pricing of the possibilities of raising US interest rates next June.
Strong economic data has been issued in the United States in the recent period, showing the extent of its flexibility. It has the largest economy in the world, which enhances the prospects for the continuation of the Federal Reserve’s monetary policy tightening cycle for as long as possible this year. Data last week showed that the US economy grew better than expected during the first quarter of this year. With weekly jobless claims reporting less than expected, as well as a surprising rise in personal consumption expenditures in April. Personal consumption expenditures are one of the most important tools that US monetary policy makers rely on in determining inflation levels in the country, which means continuing inflationary pressures on the Federal Reserve.
Over the past two weeks, Fed officials have been more hawkish than markets expected and they stressed the continuation of the battle against high inflation in the country, and taking the necessary decisions so that inflation returns to the target of 2%.
Because of that data and commentary, futures pricing rose to the prospect of the Federal Reserve raising rates Interest by 25 basis points at the next June 14 meeting, from 40% to 62% at the present time, and the pricing of futures contracts for the possibilities of keeping interest rates unchanged from 60% to 38% at present.
Later today, investors are awaiting important data from the United States, about consumer confidence in the largest economy in the world during the current month, negative data, will lead to more losses for the US dollar against a basket of global currencies. Released at 14:00 GMT, the CB Consumer Confidence Index, which measures consumer confidence in May, is expected to reach 99.1 points, from 101.3 points in April.