The US Dollar fell on Tuesday as investors consolidated recent gains and focused less on trade tensions, raising the market’s risk appetite and prompting some flows into other currencies such as the euro and Australian dollar.
Ahead of the U.S. Independence Day holiday, market sentiment also improved after the Chinese central bank moved to calm nervous foreign exchange markets following a fall in the Chinese renminbi currency.
The U.S. dollar index rose by 0.17 percent at 94.67 against a basket of major currencies ahead of the July 4 Independence Day holiday.
Furthermore, Investors are anticipating the publication on Thursday of minutes from the Federal Reserve’s June meeting, and Friday’s U.S. jobs data, for validation of policymakers’ forecasts for two more rate hikes this year.
The Euro, meanwhile, found support after Germany’s coalition settled a row over migration that had threatened to topple Chancellor Angela Merkel’s government. The EURUSD was trading 0.1 percent higher at 1.1678 at 12:00 GMT.
Over in the United Kingdom, the Pound rose on positive risk appetite after a survey showing decent growth in Britain’s construction and service industry’s market sentiment, which gave the sterling a breather from recent gloom regarding the progress of Brexit talks.
Furthermore, the Construction Purchasing Managers’ Index (PMI) picked up to 53.1 in June from May’s 52.5, better than forecast and the fastest rate of growth in seven months. It was the third month in a row that the sector grew after contracting in March.
Additionally, the Service Purchasing Managers’ Index (PMI) release is published monthly by Markit Economics. The data were based on surveys of over 400 executives in private sector service companies which were 1.2 percent higher than the forecasted data at 55.1. The surveys cover transport and communication, financial intermediaries, business and personal services, in addition to, hotels and restaurants.
The British currency rose as much as 0.04 percent versus the dollar to as high as 1.32065, away from 2018 lows hit last week of 1.3050. It later gave up some of those gains to trade at 1.3180 USD at 12:00 GMT.
Regarding the safe havens, the USDJPY was trading at 110.48 lower by 0.01 percent at 12:00 GMT on Wednesday, despite Today’s data Stateside that showed IBD/TIPP Economic Optimism Index rose to 56.4 in July to beat the market expectation of 54.2, the index is a measure of consumer sentiment.
The Commodity-linked Currencies, Australian, New Zealand and Canadian dollar, advanced against their US counterpart, supported by a rise in oil prices
Growth in the Canadian manufacturing sector accelerated in June to its fastest pace in more than seven years, the IHS Markit Canada Manufacturing Purchasing Managers’ Index showed on Tuesday.
The Canadian dollar strengthened against greenback on Tuesday, as oil prices rose to 3-1/2-year highs and domestic manufacturing data supported the view that the Bank of Canada will hike interest rates next week. The USDCAD traded at 1.31273 at 12:00 GMT.
The Australian dollar, which is considered a liquid proxy for China-related risk, took heart from robust domestic retail sales data which was 0.4 percent, better than the expected forecast by 0.01 percent. The AUDUSD was up by 0.074 percent to trade at 0.7387 at 12:00 GMT. Meanwhile, the Kiwi dollar gained 0.1 percent to trade at 0.67642 NZDUSD at 12:00 GMT.