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Dollar Edges Higher After Mid-session Setback

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Dollar Edges Higher After Mid-session Setback
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The U.S. dollar moved slightly higher in the Asian session on Wednesday, recovering from losses in the previous session, but gave up gains in the European session before rebounding into positive territory later on in the day.

Traders digested mixed comments from Fed officials regarding scaling back of the stimulus measures.

“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances,” Powell said in a hearing before the House Select Subcommittee on the Coronavirus Crisis on Tuesday.

A report released by the Commerce Department said new home sales tumbled by 5.9% to an annual rate of 769,000 in May after plunging by 7.8% to a downwardly revised rate of 817,000 in April.

The continued decrease surprised economists, who had expected new home sales to climb 0.8% to a rate of 870,000 from the 863,000 originally reported for the previous month.

With the continued nosedive, new home sales fell to their lowest annual rate since hitting 704,000 in May of last year.

The dollar index slid to 91.51, but later rose to 91.90, gaining nearly 0.15%.

Against the Euro, the dollar strengthened to $1.1926, gaining 0.15%. Flash survey data from IHS Markit showed that the euro area private sector grew at the fastest rate in 15 years in June as the economy re-opened further from virus-fighting restrictions and vaccine progress boosted confidence. At 59.2, the flash composite output index hit a 180-month high, up from 57.1 in May.

The services Purchasing Managers’ Index advanced to 58.0 in June from 55.2 in the previous month, while the manufacturing PMI held steady at 63.1 in June.

The Pound Sterling gained 0.1% against the dollar, fetching $1.3963 a unit. The flash composite output index for U.K. dropped to 61.7 in June from 62.9 in May.

The rate of input cost inflation accelerated for the fifth month running and was the joint-fastest on record. In turn, the rate of output price inflation hit a fresh record high for the second month running.

The Yen weakened to 110.98, giving up nearly 0.3%. The manufacturing sector in Japan continued to expand in June, albeit at a slower pace, the latest survey from Jibun Bank revealed on Wednesday with a manufacturing PMI score of 51.5.

That’s down from 53.0 in May, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

The dollar lost ground against the Aussie, sliding to 0.7574, from Tuesday’s close of 0.7554.

The dollar gained marginally against Swiss franc, fetching CHF 0.9183 a unit, and flat against the Loonie, quoting at C$1.2307.

The material has been provided by InstaForex Company – www.instaforex.com