US dollar retreats, sterling hits more than two-year high
Inserts dropped word "than" in the headline
U.S. house prices fall in June
U.S. consumer confidence rises
Dollar falls to nearly eight-month low vs Swiss franc
Dollar index drops to more than one-year low
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 27 (Reuters) -Sterling climbed to its highest against the U.S. dollar in more than two years on Tuesday, while the greenback dropped to a more than one-year lowafter gains the previous session, as investors awaited key economic data this week and next.
Currency moves remained driven by the prospect of upcoming U.S. interest rate cuts, which has pressured the dollar in recent weeks. Investors see a rate cut at the Federal Reserve's September meeting as all but certain, with debate now focused on the possibility of a 50-basis-point (bp)cut instead of 25.
The rate futures market has attached a 37% probability that the Fed will raise rates by 50 bps, unchanged fromlate on Friday, according to LSEG calculations. About 106 bps of cuts in 2024 are priced in by futures traders.
"Since Jackson Hole, the dollar has been grinding lower, but I would argue it's more sideways than anything else," said Eugene Epstein, head of structured products, North America at Moneycorp in New York, referring to last week's Kansas City Fed’sJackson Hole, Wyoming, symposium.
"(Fed Chair Jerome) Powell's comments were ultimately seen as dovish in every way. Non-U.S. dollar stores of wealth such as crypto recovered a little bit too. So this is all perceived as a dovish follow-through from Friday's Jackson Hole."
Sterling has been one beneficiary of the weakness in the U.S. currency, and on Tuesday the pound hit its highest since March 2022 at $1.3246. It was last up 0.3% at $1.3226. GBP=D3
The pound garnered supportfrom the contrast between Friday's remarks by Powell, which underscored market pricing for meaningful U.S. rate cuts starting next month, and the more cautious comments of Bank of England Governor Andrew Bailey.
DOLLAR'S BIG MONTHLY DECLINE
The dollar index was down 0.3%at 100.53 =USD, after earlier droppingto its lowest since July last year. For the month of August, the dollar has fallen 3.2%,on track for its biggest monthly decline since November 2022.
The greenback edged lower afterdata showed U.S. house prices dipped 0.1% on a month-on-month basis after being unchanged in May. They increased 5.1% in the 12 months through June, the smallest year-on-year rise since July 2023,
Tuesday's report also showed U.S. consumer confidence rose in August. The Conference Board' consumer confidence index increased to 103.3 this month from an upwardly revised 101.9 in July. The market though showedlittle reaction to the data.
Investors are awaiting data on the preliminary estimate for gross domestic product in the second quarter, jobless claims, and personal consumption expenditures (PCE) index, the Fed's preferred inflation gauge.
The euro gained 0.2%versus the dollar to $1.1181,just off Monday's 13-month top. EUR=EBS
"After a strong rally since early August, it looks like euro/dollar could be due some consolidation," Chris Turner, global head of markets at ING, said in a note to clients.
"The run-up in oil prices on the back of increased Middle East tension and Libyan supply challenges will not be helping."
Oil prices also paused recent advances to trade more than 2% lower CLc1on Tuesday, after a surge of more than 7% in the previous three sessions, on supply concerns prompted by fears of a wider Middle East conflict and the potential shutdown of Libyan oilfields. O/R
One currency boosted by the surge in oil prices wasthe Canadian dollar, which rose against the U.S. currency, having touched a five-month peak earlier in the session. The U.S. dollar was last down0.3%at C$1.3449 CAD=D3.
Elsewhere, the Australian dollar AUD=D3 rose 0.3%to US$0.6791, not far from a one-month high of $0.6799 hit on Friday.
Against the Swiss franc, the dollar fell to its lowest since early January and was last down 0.7%at 0.8414 franc CHF=EBS.
Currency bid prices at 27 August 07:46 p.m. GMT | |||||||
Description | RIC | Last | U.S. Close Previous Session | Pct Change | YTD Pct | High Bid | Low Bid |
Dollar index | =USD | 100.55 | 100.85 | -0.29% | -0.81% | 100.93 | 100.51 |
Euro/Dollar | EUR=EBS | 1.1184 | 1.1161 | 0.21% | 1.32% | $1.1191 | $1.115 |
Dollar/Yen | JPY=D3 | 143.95 | 144.56 | -0.35% | 2.14% | 145.135 | 143.89 |
Euro/Yen | EURJPY= | 1.1184 | 161.29 | -0.18% | 3.45% | 162.17 | 160.88 |
Dollar/Swiss | CHF=EBS | 0.8414 | 0.8473 | -0.7% | -0.03% | 0.8484 | 0.841 |
Sterling/Dollar | GBP=D3 | 1.3259 | 1.3187 | 0.56% | 4.2% | $1.3269 | $1.115 |
Dollar/Canadian | CAD=D3 | 1.3448 | 1.3486 | -0.26% | 1.46% | 1.3488 | 1.3445 |
Aussie/Dollar | AUD=D3 | 0.6791 | 0.6772 | 0.3% | -0.39% | $0.6796 | $0.6762 |
Euro/Swiss | EURCHF= | 0.941 | 0.9455 | -0.48% | 1.34% | 0.9474 | 0.9408 |
Euro/Sterling | EURGBP= | 0.8432 | 0.8463 | -0.37% | -2.72% | 0.8468 | 0.8433 |
NZ Dollar/Dollar | NZD=D3 | 0.625 | 0.6204 | 0.74% | -1.09% | $0.6254 | 0.6195 |
Dollar/Norway | NOK= | 10.4634 | 10.5295 | -0.63% | 3.24% | 10.5539 | 10.4537 |
Euro/Norway | EURNOK= | 11.7036 | 11.7726 | -0.59% | 4.27% | 11.786 | 11.6842 |
Dollar/Sweden | SEK= | 10.1457 | 10.213 | -0.66% | 0.78% | 10.2275 | 10.132 |
Euro/Sweden | EURSEK= | 11.3478 | 11.4016 | -0.47% | 2% | 11.4184 | 11.3368 |
World FX rates https://tmsnrt.rs/2RBWI5E
Consumer confidence jobs https://reut.rs/4dEXKrJ
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Alun John in London and Rae Wee in Singapore; Editing by Jamie Freed, David Evans, Helen Popper, Jonathan Oatis and Marguerita Choy
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