Euro gains after Ifo reading describes German companies as 'euphoric'
The dollar put in a mixed performance on Tuesday, weakening against the euro and pound and gaining against the yen, leaving a broad index tracking the greenback nearly unchanged ahead of a two-day Federal Reserve meeting.
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The ICE U.S. Dollar Index was flat at 94.03, bouncing off its lowest level in more than year. The gauge--which tracks the buck against a half-dozen other major rivals--dropped 1.4% last week and is down about 1.7% in July.
Market reaction to upbeat consumer confidence and home-price data were mostly muted.
Consumer confidence (http://www.marketwatch.com/story/consumer-confidence-back-near-16-year-high-2017-07-25) rose in July to the second highest level in 16 years, while U.S. home-price growth (http://www.marketwatch.com/story/home-price-growth-stays-strong-and-the-west-is-still-the-best-case-shiller-says-2017-07-25) eased slightly but stayed strong as demand outweighed supply throughout the housing market. Economic data have been softer in the first half of the year, but the Fed brushed aside weaker inflation as transitory.
However, the Fed may tinker with its assessment of inflation after a sharp deceleration recently, but still a major course correction to policy isn't in the cards (http://www.marketwatch.com/story/no-retreat-fed-to-stick-to-plans-for-rate-hike-balance-sheet-selloff-this-year-2017-07-24). The Federal Open Market Committee decision will come at 2 p.m. Eastern on Wednesday.
"Unless the Fed announces a start to its balance sheet rundown in tomorrow's FOMC announcement, it will be difficult for the dollar to change course," said Richard Perry, analyst at Hantec Markets.
"A drastic Fed announcement in the absence of a Yellen press conference or economic projections remains an unlikely scenario, so selling the dollar into strength is likely to continue," he said.
Against the yen , the dollar bought Yen111.76, up 0.6% from Yen111.10 late Monday in New York.
The euro rose to $1.1651 from $1.1645 late Monday in New York. Earlier, the euro touched $1.1711, its highest level since January 2015. Gains for the euro tracked the widely watched Ifo index of business sentiment (http://www.marketwatch.com/story/german-business-sentiment-hits-record-high-in-july-2017-07-25) in Europe's largest economy, which surged to a record high of 116.0 in July. It described German companies as "euphoric."
The euro has been one of the strongest performers of the year, and is currently up more than 10% against the buck in 2017, a far stronger advance than has been seen by the yen, up about 5% against the greenback, or the pound, up 5.5%.
The pound was fetching $1.3038 from $1.3029 late Monday.
(END) Dow Jones Newswires
July 25, 2017 14:42 ET (18:42 GMT)