The US dollar edged lower against the euro on Friday to give up some of the gains it posted yesterday, as a gloomy outlook for consumer expectations dragged the greenback lower. Housing data released earlier today also weighed on the dollar, but did not overshadow the Federal Reserveâs decision to raise interest rates on Wednesday, which maintained some of the weekly gains of the US currency.
The University of Michigan published a new reading for its consumer sentiment index today, revealing a drop by 2.7% to 94.5 in June from 97.1 in May, despite expectations of an unchanged reading. The index is based on a survey for current economic conditions and near future consumer expectations. The current economic conditions subindex declined 1.9% to 109.6 this month from 111.7 last month, while consumer expectations lost 3.4% to 84.7 from 87.7.
The lower reading in June reflected higher concerns among Democrats toward Donald Trumpâs economic plans, according to the surveyâs chief economist Richard Curtin. The US president promised, among other things, to build a wall with Mexico, end Obamacare, cut corporate tax rates, and raise fiscal spending, but did not achieve much since his inauguration in January.
A weaker belief between Republicans that Trumpâs promises will become a reality also contributed to the decline in consumer confidence this month. However, the drop was limited due to solid gains in the labor market and rising household income.
Meanwhile, the US Census Bureau said that the number of new building permits issued by the government decreased 4.9% to 1.168 million in May from 1.1228 million in April. The drop disappointed forecasts of a 1.8% gain to 1.250 million and mirrored lower demand in the housing market.
A 5.5% decline in housing starts also took place in May as 1.092 million residential buildings began construction last month from 1.156 million in the previous month. Additional housing data will be released next week from the National Association of Realtors and the US Census Bureau on existing and new home sales, respectively, which will offer a clearer image for housing demand.
Despite todayâs releases, the US dollar remained stronger against the euro on a weekly basis. Positive manufacturing data and higher interest rates on Wednesday outweighed negative data today and declines in producer and consumer prices earlier this week.
EUR/USD traded at 1.1190 as of 16:00 GMT on Friday from 1.1198 at 14:55 GMT, the pairâs highest level today. EUR/USD started trading today at 1.1147.
The Dollar Index, which tracks the performance of the US currency against a basket of other major currencies, dropped to 97.21 as of 15:54 GMT today from 97.43 yesterday.
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