Investing.com - The dollar traded largely lower against most major currencies on Tuesday after a disappointing U.S. consumer confidence report offset upbeat economic growth data and sent investors selling the greenback for profits after weeks of rallying.
The U.S. currency has seen hefty demand in recent sessions as markets prepare for U.S. monetary to tighten while Europe and Japan move in the opposite direction.
In U.S. trading on Tuesday, EUR/USD was up 0.27% at 1.2475.
The Conference Board market research group reported earlier that consumer confidence index fell to 88.7 this month from a 94.1 in October, whose figure was revised down from a previously reported 94.5.
Analysts expected the index to increase to 95.9 in November, and the surprise deterioration sent investors selling the greenback for profits, wiping out recent gains stemming from preparations for U.S. monetary policy to diverge from Europe and Asia.
The Present Situation Index declined from 94.4 to 91.3, while the Expectations Index decreased sharply to 87.0 from 93.8 in October.
Commenting on the report, director of The Conference Board Consumer Research Center Lynn Franco said, “Consumers were somewhat less positive about current business conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned."
Earlier Tuesday, the Commerce Department reported that U.S. gross domestic product grew at a seasonally adjusted annual rate of 3.9% in the third quarter, topping expectations for a reading of 3.3%.
Preliminary data initially pegged U.S. growth at 3.5% in the third quarter. The U.S. economy expanded by 4.6% in the preceding quarter.
The data showed personal consumption rose 2.2% in the third quarter, beating expectations for a 1.9% gain and up from a preliminary estimate of 1.8%.
Consumer spending typically accounts for nearly 70% of U.S. economic growth.
Tuesday's mixed data sent the greenback falling on profit taking.
The dollar has rallied in recent weeks on expectations for U.S. monetary policy to grow less accommodative while European and Asian central banks move in the opposite direction.
Meanwhile in Europe, data revealed that Germany narrowly avoided a recession in the third quarter, posting economic growth of 0.1%.
The report came a day after data showed that German business sentiment improved this month, snapping six successive months of declines.
The upbeat data indicated that the downturn the euro area’s largest economy may have ended and curbed expectations that the European Central Bank may soon embark on quantitative easing measures, which gave the euro support.
The dollar was down against the yen, with USD/JPY down 0.35% at 117.87, and down against the Swiss franc, with USD/CHF down 0.22% at 0.9644.
The yen found some support after Bank of Japan Governor Haruhiko Kuroda voiced concerns over the economic impact of the weaker yen earlier Tuesday.
The currency received an additional boost after the minutes of the BoJ’s October meeting showed that some officials opposed plans to expand its stimulus program.
The greenback was down against the pound, with GBP/USD up 0.04% at 1.5714.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.35% at 1.1243, AUD/USD down 1.01% at 0.8259 and NZD/USD down 0.71% at 0.7805.
Statistics Canada reported earlier that retail sales rose 0.8% in September, more than the expected 0.6% gain, after a 0.2% slip in August.
Core retail sales, which exclude automobiles, were flat in September, compared to expectations for an increase of 0.4%, after a 0.2% fall the previous month.
The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29% at 87.93.
On Wednesday, the U.S. is to release a flurry of data ahead of Thursday’s holiday, including reports on durable goods orders, unemployment claims, personal income and spending, as well as reports on new and pending home sales and revised data on consumer sentiment.