Euro rises after GDP data show continued strong growth
The dollar resumed its selloff on Tuesday, giving back part of the prior session's rally as the 10-year U.S. benchmark yield slipped back below 2.7%.
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What are currencies doing?
The ICE U.S. Dollar Index , which measures the buck against a basket of six rival currencies, gave up 0.3% to 89.014. On Monday, the benchmark picked up 0.4% , partly recovering from a sharp selloff last week that sent it to a three-year low.
The euro rose to $1.2428, up from $1.2383 late Monday in New York, while the pound jumped to $1.4115 from $1.4075 on Monday. Sterling briefly slipped below the $1.40 handle earlier on Tuesday after a leaked U.K. government document (http://www.marketwatch.com/story/uk-governments-own-analysis-shows-widespread-damage-from-brexit-2018-01-30) revealed that the U.K. will be significantly worse off outside the EU, regardless of what Brexit deal is struck.
The dollar also moved lower against the yen , buying Yen108.67 from Yen108.96 on Monday.
What is driving the market?
Tuesday's dollar pullback was seen as a reversal from Monday's rally (http://www.marketwatch.com/story/dollar-rebounds-helped-by-10-year-treasury-yield-topping-270-2018-01-29) that came after the yield on 10-year U.S. Treasury notes jumped to its highest level since April 2014 on worries inflation would start to pick up faster than expected. The yield, however, fell 2 basis points on Tuesday to 2.68%, according to FactSet data.
The euro was also supported by Eurostat data showing the eurozone economy expanded by 0.6% in the fourth quarter, further adding to evidence the region is recovering fast.
What are strategists saying?
"The U.S. dollar is paring yesterday's gains while the 10-year Treasury yield has slipped back below the 2.70% level after pushing above 2.73% briefly. European bonds have also eased, with yields one-two basis points lower. It is thus far a mild Turnaround Tuesday, but suggests that the market psychology that has driven the dollar lower and yields higher persistently since mid-December has not been broken," currency strategists at BBH said in a note.
"The shape of the dollar's pullback will give better indication of whether or not the long overdue technical correction is at hand. A move above $1.2440-$1.2460 might see the euro re-challenge its recent highs above $1.25 and probe into the band of technical objectives that extends from around $1.26 to $1.28," they added.
What else is coming up?
The Case-Shiller home price index for November is due at 9 a.m. Eastern Time, followed by the consumer confidence index for January at 10 a.m.
(END) Dow Jones Newswires
January 30, 2018 07:18 ET (12:18 GMT)
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