Investing.com – The dollar fell against a basket of major basket currencies, as investors mulled over the prospect of a rebound in U.S. economic growth in the second-quarter amid a dip in consumer confidence.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.08% to 97.25 by 13:23 EDT.
Investors mulled over a mixed bag of economic data released on Tuesday, as consumer confidence dipped in April while consumer spending recorded its biggest increase in four months.
The Commerce Department said that consumer spending, which accounts for roughly 70% of U.S. economic activity, rose 0.4%, in line with economists’ forecasts.
The Consumer Confidence Index fell to 117.9, which was below expectations of a rise to 119.8.
Losses in the greenback were capped, however, as investor expectations that the Federal Reserve will hike interest rates in June remained elevated.
According to investing.com’s Fed rate monitor tool over 80% of traders expect the Fed to hike its benchmark rate in June from 0.75-1% to 1-1.25%.
The dollar has failed to recover from its slump in recent weeks, wiping out all of its gains since Donald Trump was elected U.S. president, as investors feared that recent political scandals engulfing President Trump would delay the president's introduction of pro-growth economic agenda, which includes tax reform, deregulation and infrastructure spending.
Elsewhere, EUR/USD recovered to trade at $1.1176, after falling to session lows, as European Central Bank chief Mario Draghi reiterated that accommodative monetary policy remains necessary despite an uptick in inflation and economic growth.
“For domestic price pressures to strengthen, we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation.” Draghi said.
GBP/USD traded at $1.2847, up 0.05%, after a ICM poll for The Guardian showed the Conservative Party held a healthy lead of 45% compared to Labour's 33%, ahead of the general election scheduled for June 8.
USD/JPY dipped to 110.72, down 0.46%, while USD/CAD rose by 0.06% to $1.3465, as the oil-linked Canadian dollar, remained under pressure after oil prices dropped more than 1% during the session.