Dollar edges higher, but gains remain uncertain
The U.S. dollar edged marginally higher Wednesday, helped by upbeat economic data, but gains are limited as uncertainty over trade policies and deficit worries remain.
At 06:45 ET (10:45 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, gained 0.1% to 99.500, but remained 8% lower this year to date as investors look for alternatives to U.S. assets.
Dollar helped by rising consumer confidence
The dollar received a boost on Tuesday after the release of data showing U.S. consumer confidence in May was much better than expected.
However, new orders for durable goods also plunged by the most in six months in April as the flip-flopping tariff salvos take a toll on the economy and businesses.
Markets have also been sensitive to the deteriorating U.S. debt profile, exacerbated by Moody’s downgrade of the U.S. sovereign credit rating on May 16.
“A more conciliatory tone from President Trump towards the EU, coupled with reports of pressure from some EU leaders for a quick trade deal, also contributed to the squeeze in USD shorts,” said analysts at ING, in a note.
Traders will keep an eye on the minutes from the May Fed meeting, due later in the session, for clues of future monetary policy amid a period of economic uncertainty.
Federal Reserve Bank of Minneapolis President Neel Kashkari on Tuesday called for keeping interest rates steady until there is more clarity on how higher tariffs affect inflation, warning against "looking through" the impact of such supply price shocks.
In Europe, EUR/USD traded 0.1% higher to 1.1334, with the single currency stabilizing after dropping 0.5% on Tuesday.
GBP/USD rose 0.1% to 1.3516, after data showed that British grocery price inflation jumped to 4.1% for the four weeks to May 18, its highest level since February last year.
In Asia, USD/JPY traded 0.1% lower to 144.15, with Japan’s yen steady after dropping 1% on Tuesday following a report by Reuters that Japan will consider trimming issuance of super-long bonds after a sharp rise in yields in recent weeks.
Source: Investing.com
