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Dollar makes cautious gains on data and earnings, Ukraine weighs

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Investing.com -

Investing.com - The dollar traded largely higher against most major currencies on Wednesday, buoyed by Tuesday's inflation and home sale data as well as upbeat earnings, though geopolitical tensions in Ukraine weighed on the greenback's advance.

In U.S. trading on Wednesday, EUR/USD was down 0.04% at 1.3460.

Upbeat data released in the U.S. on Tuesday and a slew of better-than-expected earnings sent the dollar gaining on Wednesday though spates of profit taking watered down the greenback's advance at times.

The Labor Department reported Tuesday that the U.S. consumer price index rose 2.1% in June, unchanged from the previous month and in line with forecasts.

On a month-over-month basis, U.S. consumer prices were up 0.3% after a 0.4% increase in May, also in line with expectations.

June's core inflation rate, which excludes food and energy costs, rose by just 0.1% from May and 1.9% on year, slightly below market calls for 0.2% and 2.0% readings, respectively, which illustrated how gasoline was driving the headline CPI up, though markets viewed the numbers as fundamentally healthy anyway.

Also on Tuesday, the National Association of Realtors reported earlier that existing U.S. home sales rose 2.6% to 5.04 million units in June from 4.91 million in May, beating market forecasts for a 2.0% rise to 4.97 million units.

Elsewhere, earnings season is underway in the U.S., and better-than-expected numbers from Comcast, Verizon, Chipotle Mexican Grill, Google, Apple, Microsoft, General Electric and others also sent investors flocking to stocks and out of safe-haven gold positions, often a recipe for a firmer dollar.

Separately, reports that two Ukrainian jet fighters were shot down over the rebel-held city of Donetsk only days after pro-Russian separatists allegedly shot down a Malaysian Airlines flight with a missile rattled nerves, which took its toll on the dollar, the euro and other currencies.

Geopolitical concerns sparked fears that the fallout from the Ukraine conflict, which could include fresh sanctions slapped on Russia, will dampen global recovery and prompt the Federal Reserve and other central banks to keep policy loose for longer than once anticipated.

The dollar was up against the yen, with USD/JPY up 0.08% at 101.54, and up slightly against the Swiss franc, with USD/CHF up 0.01% at 0.9025.

The greenback was up against the pound, with GBP/USD down 0.21% at 1.7030.

In the U.K., the minutes of the Bank of England's June meeting released earlier revealed that policymakers voted unanimously to keep monetary policy unchanged last month.

The minutes also said weak wage growth in the face of strong employment growth made it difficult to gauge the degree of slack in the labor market, which allowed the pound to soften against the greenback.

Some members of the monetary policy committee expressed concerns that raising rates too early could destabilize the recovery, given recent signs of weakness in the global economic recovery.

Separately, a report showed that mortgage approvals in the U.K. rose broadly in line with expectations in June.

The British Banker's Association reported that the number of new mortgages approved increased to 43,300 last month from May's revised total of 41,900, just below forecasts of 43,400.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.07% at 1.0730, AUD/USD up 0.62% at 0.9452 and NZD/USD up 0.21% at 0.8686.

Statistics Canada reported earlier that retail sales rose 0.7% in May, beating forecasts for a 0.6% gain, while the previous month's number was revised up to 1.3%.

Core retail sales, which strip out automobile sales, rose 0.1% in May, falling short of expectations for a 0.3% increase and slowing from an upwardly revised 0.8% in April.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.07% at 80.91.

On Thursday, the U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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