FOREX-Dollar firm on upbeat U.S. data; pound and euro on the back foot

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* Strong US data curbs expectations of deep Fed rate cut

* Pound hovers near 27-month lows on Brexit woes

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds details and quotes, updates prices)

TOKYO, July 17 (Reuters) - The dollar stood firm onWednesday after upbeat U.S. data further tempered expectationsof aggressive policy easing by the Federal Reserve later thismonth.

The struggling pound and euro also provided additionalimpetus to the U.S. currency.

The dollar index .DXY against a basket of six majorcurrencies was effectively unchanged at 97.365 after gaining0.5% the previous day.

The dollar rose after stronger-than-expected June U.S.retail sales data dampened expectations that the Fed could cutinterest rates by 50 basis points (bps) rather than 25 bps atits month-end policy review.

"The strong U.S. data is a key driver behind the dollar'slatest gains, but weakness in European currencies, notably thepound and euro, is also playing a significant role as well,"said Junichi Ishikawa, senior FX strategist at IG Securities.

The pound GBP=D4 retreated to a 27-month low of $1.2396overnight as Boris Johnson and Jeremy Hunt, the two candidatesto be Britain's next prime minister, vied to outgun each otheron taking a harder Brexit stance. GBP/

Sterling last traded little changed at $1.2411.

The euro EUR= was steady at $1.1212 after losing more than0.4% the previous day.

The losses came after a survey by the ZEW institute showedthat the mood among German investors deteriorated more sharplythan expected in July amid the prolonged trade dispute betweenChina and the United States as well as political tensions withIran. urn:newsml:reuters.com:*:nS8N22E024

The dollar was a touch lower at 108.175 yenJPY= afteradvancing 0.3% against the yen overnight on the strong U.S.retail sales data.

The Australian dollar AUD=D4 was nearly flat at $0.7007,having lost 0.4% on Tuesday following comments by U.S. PresidentDonald Trump.

The United States still has a long way to go to conclude atrade deal with China but could impose tariffs on an additional$325 billion worth of Chinese goods if it needed to do so, Trumpsaid. urn:newsml:reuters.com:*:nW1N21900R

The Aussie is sensitive to the economic fortunes of China,Australia's largest trading partner.

The impact of Trump's comments on other major currencies,however, was limited.

"The U.S.-China trade row is not at the centre of themarket's attention right now. Focus is on the Fed's policy, U.S.data and their impact on yields," Ishikawa at IG Securitiessaid.

Fed Chairman Jerome Powell, speaking in Paris on Tuesday,reiterated a pledge to "act as appropriate" to keep the U.S.economy humming. urn:newsml:reuters.com:*:nL2N24H1MO

Chicago Fed President Charles Evans, meanwhile, said onTuesday that an interest rate cut of a half a percentage pointat the U.S. central bank's July 30-31 policy meeting could speedup achieving the Fed's inflation goal. urn:newsml:reuters.com:*:nL2N24H1JH

"A Fed rate cut has become a foregone conclusion. But thereappears to be no consensus --not only in the markets but withinthe Fed itself-- on how many times rates would be lowered andthe direction of the U.S. economy," said Makoto Noji, chiefcurrency and foreign bond strategist at SMBC Nikko Securities. (Reporting by Shinichi SaoshiroEditing by Shri Navaratnam & Kim Coghill) ((shinichi.saoshiro@thomsonreuters.com; Reuters Messaging:shinichi.saoshiro.reuters.com@reuters.net+813-6441-1774))

This article appears in: Politics , Stocks , World Markets , Economy
Referenced Symbols: EUR

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