The US dollar climbed against a basket of its major peers on Tuesday, as focus shifted from the withdrawal of the Republican healthcare bill to strong economic data. An index of consumer confidence surged in March, which added to the effect of statements from Federal Reserve officials on Monday.
A new reading for the consumer confidence index from the Conference Board showed that the index rose to 125.6 in the current month, from 116.1 in February. The reading was far above expectations of 114, and marked the highest level for the index in about 17 years.
Improved consumersâ assessment of the strength of the US economy and the labor market was the main driver for the gain. The Conference Board said that its survey for consumer confidence revealed better sentiment toward current conditions and stronger short term outlook.
27.1% of surveyed consumers expect business environment to improve in the next 6 months, from 23.9% in February. The outlook for the labor market was also stronger, as 24.8% of consumers believed the economy will create more jobs within the same period, from 20.9% last month.
Comments from two Federal Reserve officials on Monday supported the US dollar. Chicago Federal Reserve President Charles Evans said that the US central bank will continue tightening its monetary policy. However, Evansâs comment had a bullish stance as he said that he expects two interest rate hikes in 2017.
Meanwhile, Dallas Federal Reserve President Robert Kaplan gave a similar view when he spoke at Texas A&M University yesterday. Kaplan, who is a member of the Federal Open Market Committee, said that he believes the economy will grow 2.25% in 2017, which would prompt the Federal Reserve to raise interest rates at least once more.
Investors are now anticipating pending home sales data on Wednesday, along with other speeches by members of the Federal Open Market Committee, which may offer clarity on the future of monetary policy. Boston and San Francisco Federal Reserve Presidents Eric Rosengren and John Williams are both due to speak tomorrow.
EUR/USD traded at 1.0810 as of 19:15 GMT on Tuesday, from 1.0799 at 18:35 GMT, the pairâs lowest level since March 24. EUR/USD started the day at 1.0861.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, rose to 99.71 as of 19:08 GMT today, from 99.16 yesterday.
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