On Tuesday, the U.S. dollar traded under pressure vs. its peers amid fears that U.S. President Donald Trump is having difficulties implementing his reform agenda. As it turns out, at least three Republicans are set to vote against the bill, along with Democrat lawmakers. This reminded market watchers of the lack of progress in terms of fiscal policy, which means that tax reform could be pushed back much later. As for data, import prices posted the 0.2% dip as expected and the NAHB housing market index dipped from 66 to 64 instead of improving to 67. US housing starts and building permits are lined up next.
The single currency settled at $1.1535, having made a 14-months top at $1.1583. Economic data from the region was actually weaker than expected as the German ZEW index slipped from 18.6 to 17.5 versus the 17.8 forecast while the region's ZEW is down from 37.7 to 35.6 to reflect weaker optimism. There are no major reports due from the euro zone today, leaving traders to price in expectations for the ECB statement tomorrow as the ECB inches towards bringing an end to its monetary stimulus efforts. However, traders remain wary that the ECB’s policymakers could take a less hawkish approach than bulls were betting.
The Sterling pound was one of the weakest performers for the day as UK inflation unexpectedly fell to 2.6% in June, down from 2.9% in May, pulling back from its post-Brexit high. Cable dropped amid expectations that the Bank of England (BOE) is now less likely to raise interest rates in the near future because of the lower than forecasted figure. GBP/USD fell by 0.2% to settle at $1.3024, after hitting $1.3126, highest level since September 2016. There are no reports due from the UK today.
The yen regained some ground on risk appetite and dollar weakness. There were no reports out of Japan yesterday and none are due today so market sentiment could stay in play or traders might start pricing in expectations for the upcoming BOJ decision.
Gold prices rose to a two-week high yesterday as the Greenback declined on fading hopes of an imminent hike in U.S. interest rates. The yellow metal rose as much as 0.5% to settle at $1,240.51.
Oil prices declined slightly yesterday, after a surge in U.S. crude inventories and ongoing high supplies from producer club OPEC revived worries of a fuel supply overhang. Brent crude futures fell as much as 0.2% or 11 cents, to settle at $48.73 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were at $46.28.
The most important economic events:
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