The dollar was lower against most of the major currencies at Tuesday’s North American close despite earlier gains tied to dollar-friendly economic data and risk-on trade for U.S. equities. The greenback was higher at today’s open as an unexpected decline in Japanese household spending fueled demand for USD/JPY that was later amplified by modest gains on Wall Street and a better-than-expected upward revision in Q3 GDP, and 9-year high in consumer confidence.
USD/JPY nearly challenged 113.50 on the heels of the GDP revision, but was turned around on signs that business confidence in the economy declined as spending on equipment was revised down to -4.8% versus -2.7% initially. Consumer confidence surged, but the dollar could not break through 113.00 and spent the remainder of the day retreating to 112.25 for further consolidation, the 50% retracement of the dollar’s move from its 6/5/15 high of 126.09 and 7/12/16 low of 98.73. USD/JPY last traded at 112.42 for a gain of 0.42%.
The euro was under heavy selling pressure at the open on assurances by the European Central Bank to temporarily increase Italian bond purchases in the event Italian yields spike on the referendum outcome, creating an expansion in QE. This resulted in a weakening in the EUR/USD pair to 1.056.
However, support at the 200-hour moving average at 1.0596 coupled with a general weakening of the dollar propped up the euro, putting it at 1.0647 at the close, a gain of 0.30% from Monday.
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