Market Overview

Forex - Dollar lower vs. most rivals ahead of FOMC, U.S. data

Forexpros – The U.S. dollar was down against most of its major counterparts on Tuesday, as investors awaited a Federal Reserve statement on monetary policy, which could provide hints regarding further easing.

During European morning trade, the greenback was down against the euro, with EUR/USD climbing 0.54% to hit 1.4255.

The greenback was fractionally lower against the pound, with GBP/USD easing up 0.06% to hit 1.6329.

The U.K. Office for National Statistics said earlier that manufacturing production fell by 0.4% in June, confounding expectations for a 0.2% gain.

A separate report showed that the country’s goods trade deficit widened unexpectedly to GBP8.9 billion in June from GBP8.5 billion in May.

Meanwhile, the greenback was down heavily against the safe haven yen and Swiss franc, with USD/JPY dropping 0.7% to hit 77.21 and USD/CHF sinking 1.56% to hit 0.7433, after falling to a record low of 0.7360 earlier.

The yen approached its highest level versus the greenback since Tokyo's intervention last week, prompting Japanese Finance Minister Yoshihiko Noda to say that he was closely watching market movements “with a sense of urgency”.

Earlier Tuesday, official data showed that Swiss consumer sentiment fell to minus 17.0 in the three months to July, disappointing expectations for a decline to minus 7.0, as households turned more pessimistic about the country's economic prospects in the coming 12 months.

Elsewhere, the greenback erased gains against the risk-sensitive Canadian, Australian and New Zealand dollars, with USD/CAD dipping 0.16% to hit 0.9929, AUD/USD edging 0.17% higher to hit 1.0207 and NZD/USD adding 0.38% to hit 0.8241.

A report from China’s National Bureau of Statistics showed that consumer price inflation rose by a seasonally adjusted 6.5% in July, the fastest pace in three years.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.45% to hit 74.61.

Later in the day, the U.S. was to publish preliminary data on nonfarm productivity and labor costs.

In addition, the Federal Reserve was to announce the federal funds rate. The announcement will be followed by the bank’s rate statement, which could provide hints regarding further monetary easing.



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