The dollar was little changed against the other major currencies on Tuesday, as markets looked ahead to U.S. reports on retail sales and consumer sentiment later in the week to gauge the economic outlook. EUR/USD was trading at 1.3870, holding below the two-and-a-half year peaks of 1.3915 struck last week. The pair fell to lows of 1.3834 earlier Tuesday. The euro moved lower after European Central Bank Vice President Vitor Constancio said the bank made its forward guidance on the existence of slack in the euro zone economy more precise at last week’s meeting, but this was not picked up by markets. He also said the central bank still had policy options available, including lower interest rates or quantitative easing, if necessary. The euro has strengthened broadly since the ECB refrained from implementing any new measures to shore up growth last week, despite forecasting below target inflation for the next few years. USD/JPY was last down 0.08% to 103.18, and was trading in a range of 103.43 and 103.16. Investors remained cautious in the wake of a selloff in risk assets on Monday, after unexpectedly weak trade data from China raised fresh concerns over the strength of the world’s second-largest economy. Markets were also warily eyeing the ongoing standoff between Russia and the West over Ukraine. Elsewhere, the dollar was fractionally higher against the pound and the Swiss franc, with GBP/USD dipping 0.08% to 1.6629 and USD/CHF edging up 0.05% to 0.8781. Sterling fell to lows of 1.6597 against the dollar earlier Tuesday after Bank of England Governor Mark Carney indicated that there is leeway for the bank to leave rates on hold for longer. During testimony to parliament’s Treasury Select Committee, Carney said the amount of spare capacity in the economy was probably slightly higher than 1.5% of gross domestic product, indicating that the economic recovery can continue without pushing up inflation. The Australian dollar was little changed, with AUD/USD trading at 0.9034. Meanwhile, NZD/USD rose 0.21% to 0.8489 bolstered by expectations for a rate hike by the Reserve Bank at its policy meeting on Wednesday. The U.S. dollar also slipped lower against the Canadian dollar, with USD/CAD down 0.16% to 1.1088. The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was trading at 79.87, unchanged for the day.
Posted on: Wed, 12 Mar 2014 15:06:44 +0000
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