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Forex - Dollar falls on global demand for euro, shrugs Fed comments

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Shutterstock photo - The dollar fell against most major currencies on Tuesday after German factory orders beat expectations, while investors viewed dovish statements from a key Federal Reserve official over the fate of monetary easing tools as already priced into trading.

In U.S. trading on Tuesday, EUR/USD was up 0.36% at 1.3305.

In Europe earlier, official data revealed that German factory orders rose by 3.8% in June, surpassing market consensus forecasts calling for a 1.0% gain.

Orders within the euro zone rose 10% last month, while sales outside of the single currency block rose by just 0.9%.

The data gave the euro support on hopes better days lie ahead for the euro zone economy, as did an upward revision to the German economy from the International Monetary Fund.

The multilateral lending institution hiked its German growth forecast to 1.4% in 2014 from a previous 1.3% forecasts and maintained its 2013 growth forecast at 0.3% in its annual report on the country.

Elsewhere in Europe, a separate report showed that Italy's economy contracted less than forecast at 0.2% in the second quarter compared with expectations for a 0.4% contraction, indicating that the euro zone's third largest economy may be stabilizing.

The news supported the euro.

Meanwhile, Federal Reserve Bank of Chicago President Charles Evans, a noted dove, said the U.S. central bank could begin tapering its USD85 billion bond-buying program later this year if the economy improved, though investors viewed his comments as already priced in, as other Fed officials have made similar comments in the recent past.

Elsewhere, the Commerce Department reported earlier Tuesday that the U.S. trade deficit narrowed by 22.4% to USD34.2 billion from a USD44.1 billion deficit in May.

Analysts were expecting the U.S. trade deficit to narrow to USD43.5 billion in June.

The data showed that U.S. exports rose 2.2% in June to USD191.2 billion, while imports fell 2.5% to USD225.4 billion as petroleum imports declined sharply.

The greenback, meanwhile, was flat against the pound, with GBP/USD unchanged at 1.5354.

The pound rose earlier after the Office for National Statistics said that U.K. manufacturing production jumped by 1.9% in June, blowing past expectations for a 0.9% increase.

The ONS added industrial production rose by 1.1% in June, beating expectations for a 0.6% increase after posting a flat reading in May.

The numbers came a day after London-based Markit Economics reported that the U.K. services purchasing managers' index rose to 60.2 from 56.9 in June, well above economists' expectations for a reading of 57.2.

The dollar was down against the yen, with USD/JPY down 0.60% at 97.70, and down against the Swiss franc, with USD/CHF trading down 0.18% at 0.9257.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.10% at 1.0372, AUD/USD up 0.68% at 0.8990 and NZD/USD trading up 1.14% at 0.7912.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.33% at 81.64. - offers an extensive set of professional tools for the financial markets.

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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.

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