The US dollar plummeted against the euro to the lowest level since August 2016, despite a strong reading for consumer confidence that was published earlier today. Tradersâ appetite for the greenback deteriorated in the wake of a speech by European Central Bank President Mario Draghi, which raised confidence in the euro zoneâs economic recovery and supported the shared currency.
Consumer confidence improved in June, according to a fresh report released by the Conference Board at 14:00 GMT today. The Conference Board Consumer Confidence Index rose to 118.9 in June following a decrease to 117.6 in May, which beat analyst estimates of 116.0. The gain was led by an increase of 5.7 points to 146.3 for the present situation index, which overpowered a decline of 1.7 for the expectations index to 100.6.
The data revealed that consumersâ assessment of current conditions in June was near the highest level in 16 years, even though expectations over the short term somewhat eased. Meanwhile, consumersâ outlook for the labor market was mixed this month as more consumers expected less jobs to be available in the months ahead. However, overall consumer sentiment remained upbeat as confidence in economic growth improved.
A separate reading for the 20-City Composite S&P/Case-Shiller House Price Index, which measures the change in home selling prices in 20 metropolitan areas, showed a yearly gain of 5.7% in April from 5.9% in March. The reading disappointed expectations of a 5.9% yearly gain in April as home prices in Boston, Cleveland, San Francisco, and Tampa posted losses. The reading increased pressure on the US dollar, which failed to move higher today in the face of a stronger euro.
Remarks by European Central Bank President Mario Draghi this morning affirmed confidence in the economic recovery within the European Union. Draghi stated that factors holding inflation down appear to be temporary, which requires the central bank to be prudent when approaching changes to its monetary policy. The ECB president echoed certainty that the bankâs monetary policy is moving in the right direction and its full effects on inflation will gradually materialize.
Meanwhile, Federal Reserve Chairwoman Janet Yellen spoke at an event in London, saying that she does not believe another run on the banking system could happen in her lifetime. Her speech did not contain any hints on future monetary policy or interest rate moves from the Federal Open Market Committee, which lent the US dollar no support.
EUR/USD rose to 1.1346 at 18:55 GMT on Tuesday, the pairâs highest level since August 2016, from 1.1179 when trading started today. GBP/USD climbed to 1.2805, a level last seen on June 8, from 1.2720 at the beginning of the day.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, dropped to 96.40 at 18:57 GMT today from 97.42 yesterday.
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