EUR/USD
The euro softened slightly against the dollar on Tuesday after comments from Federal Reserve officials left markets unclear as to when the Fed will begin tapering monetary stimulus measures, which weaken the greenback to spur recovery. The uncertainty bolstered the dollar's safe-haven appeal as did U.S. housing-sector data. Data revealed that German business confidence improved in September though not in line with expectations. The German Ifo business climate index ticked up to 107.7 from 107.6 in August, the highest level since March 2012 though still below expectations for a reading of 108.2. The single currency also remained under pressure after European Central Bank President Mario Draghi said that the bank is ready to inject a third round of liquidity into the region’s banks if needed, in order to safeguard the bloc’s recovery.
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GBP/USD
The pound remained lower against the U.S. dollar on Tuesday, after the release of disappointing U.S. consumer confidence data and as uncertainty over the future of the Federal Reserve's stimulus program continued to weigh. Data showed that the Conference Board’s index of U.S. consumer confidence fell to 79.7 on September from 81.8 in August. Economists had forecast a decline to 79.9. The report came as concerns over the outlook for the U.S. recovery mounted after New York Federal Reserve President William Dudley on Monday defended the central bank’s decision to keep its stimulus program unchanged last week. Dudley said that adjustments to the Fed’s $85 billion-a-month asset purchase program "need to be anchored in an assessment of how the economy is actually performing”. In the eurozone, data showed that German business confidence improved in September, but to a lower than expected level.
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USD/JPY
The dollar was up against the yen on Tuesday after investors overlooked conflicting comments from Federal Reserve officials and favored the greenback after U.S. home-price data met expectations and rekindled expectations for monetary stimulus programs to unwind soon. Separately, Dallas Fed President Richard Fisher, a noted policy hawk, said on Monday the decision to keep the Fed's bond-buying program unchanged has damaged the institution's credibility. The dollar saw only slight headwinds after soft consumer sentiment data hit the wire earlier Tuesday. The Conference Board’s index of U.S. consumer confidence ticked down to 79.7 in September from 81.8 in August. Analysts were expecting the figure to dip to 79.9. Solid housing data bolstered the greenback over the yen. The S&P/Case-Shiller index of property values in 20 cities increased 12.4% on year in July, in line with market expectations.
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USD/CAD
The U.S. dollar firmed against its Canadian counterpart on Tuesday after Canadian retail sales numbers missed expectations. Solid data out of the U.S. housing sector meanwhile bolstered the greenback against the loonie. Statistics Canada reported earlier that retail sales rose 0.6% in July from June, below forecasts for a 1% gain. Core retail sales were up 1%, in line with forecasts. The lackluster data sent investors favoring the U.S. dollar over its Canadian cousin, especially after U.S. housing data offset conflicting comments from Federal Reserve officials. Separately, Dallas Fed President Richard Fisher, a noted policy hawk, said on Monday the decision to keep the Fed's bond-buying program unchanged has damaged the institution's credibility. The dollar saw only slight headwinds after soft consumer sentiment data hit the wire earlier Tuesday.
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