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Dollar slumps; sterling and euro hit highs

2017-3-22 10:27:41Basics of Trading
Dollar slumps; sterling and euro hit highs

The dollar slumped against a basket of major currencies on Tuesday, as the Federal Reserve’s dovish comments concerning rate hikes continued to weigh on sentiment while sterling and the euro surged.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 0.68% to 99.48 by 13:22 EDT.

The dollar dived to a six-week low, as better than expected economic data failed to lift sentiment while a surge in sterling and euro heaped further pressure on the greenback.

The Commerce Department said on Tuesday, the current account deficit, which measures the difference in value between exported goods, services and interest payments, fell 3.1% to $112.4 billion.

Economists had expected the current account deficit to shrink to $128.2 billion.

Meanwhile, investors welcomed the first round of Federal Reserve speakers, after the U.S. Central Bank raised rates last Wednesday.

FOMC member William Dudley spoke at an event in New York City, but did not discuss monetary policy while Cleveland Fed President Loretta Mester is due to make an appearance later during the session.

Elsewhere, sterling and the euro surged against the greenback during the session, after better than expected UK inflation data propped up the pound while the euro gained on the back of growing optimism that centrist candidate Emmanuel Macron would see off the challenge from anti-EU candidate Marine Le Pen in the French presidential race.

GBP/USD rose 1.06% to $1.2491 while EUR/USD traded 0.7% higher to $1.0814.

Meanwhile, the dollar bucked its trend lower against the yen with USD/JPY 0.68% lower at 111.80 while USD/CAD fell 0.21% to $1.3323.