The dollar is losing ground against all of its major competitors Tuesday, due to uncertainty ahead of the Federal Reserve’s monetary policy announcement The Fed will conclude its 2-day policy meeting tomorrow and is widely expected to keep interest rates unchanged. Investors will be paying close attention to any hints regarding the outlook for rates. A recent series of weak economic reports has many analysts predicting that the Fed will delay its first rate hike until later in the year.
Meanwhile, U.S. economic data proved mixed Tuesday morning. Annual growth in home prices in major U.S. metropolitan areas accelerated by more than expected in the month of February, according to a report released by Standard & Poor’s on Tuesday. The report said the S&P/Case-Shiller 20-City Composite Home Price Index jumped 5.0 percent year-over-year in February compared to a downwardly revised 4.5 percent increase in January.
Economists had expected the annual rate of growth to accelerate to 4.7 percent from the 4.6 percent originally reported for the previous month.
After reporting a significant rebound in U.S. consumer confidence in the previous month, the Conference Board released a report on Tuesday showing that its consumer confidence index unexpectedly pulled back sharply in the month of April.
The Conference Board said its consumer confidence index tumbled to 95.2 in April from an upwardly revised 101.4 in March. The steep drop came as a surprise to economists, who had expected the consumer confidence index to climb to a reading of 102.5.
Investors are becoming more optimistic about the situation in Greece. The Greek government rearranged its negotiating team yesterday and Prime Minister Alexis Tsipras stated today that he expects to reach a deal with international creditors by May 9.
The European Central Bank is not preparing for an exit of Greece from the euro area, but aiming to strengthen the bonds with the new government, ECB Executive Board member Benoit Coeure said.
In the transcript on an interview to the French Magazine Alternatives Economiques, published on the ECB website on Tuesday, Coeure said, “The exit of Greece is not a scenario we are working on.”
He also said that all the efforts being made at the moment were aimed at strengthening the relationship with Greece, given the new priorities of the government, in a context that remains that of the euro area and which involves rights but also the duty to respect common rules.
The move to reshuffle the Greek team that conducts negotiations with creditors will help the situation, but the government must decide on serious reforms to make progress in talks, Bank of France Governor Christian Noyer said Tuesday.
In an interview to Europe 1 radio, Noyer said the government’s move to reduce the role of the Greek Finance Minister Yanis Varoufakis in the negotiating team “does not change the substance at all”.
He said the Greek government must decide to undertake serious reforms to put the talks back on track.
The dollar has been weakening against the Euro for the past 2 weeks and has fallen to a 3-week low of $1.0985. The U.S. currency is approaching support around the $1.10 level.
French consumer confidence strengthened to its highest level since January 2010, survey data from the statistical office Insee revealed Tuesday. The consumer confidence index rose to 94 in April, the highest level since January 2010, from 93 in March. The reading came in line with expectations.
French unemployment rose to a record high in March, data released by the labor ministry revealed late Monday. The number of unemployed increased 15,400 or 0.4 percent from February to 3.51 million in March.
The buck has been losing ground against the pound sterling for over 2 weeks and has dropped to $1.5330 this afternoon, its lowest level since early March.
The British economy expanded at the slowest pace since 2012, reflecting contraction in construction and industrial activity, preliminary estimate published by the Office for National Statistics revealed Tuesday.
Gross domestic product expanded 0.3 percent sequentially during the January to March period, the slowest growth since the fourth quarter of 2012. The growth rate was forecast to slow marginally to 0.5 percent from the 0.6 percent logged in the fourth quarter of 2014.
Loans approved for house purchase in the U.K. rose to the highest level in six months during March, data from the British Bankers’ Association showed Tuesday. The number of loans approved for house purchase climbed to 38,751 from 37,453 in March. Economists had expected an increase in the figure to 38,700.
The greenback has slipped to Y118.885 against the Japanese Yen this afternoon, from around Y119.195 in early trade.
The total value of retail sales in Japan tumbled 9.7 percent on year in March, the Ministry of Economy, Trade and Industry said on Tuesday, coming in at 12.396 trillion yen. That missed forecasts for a decline of 7.5 percent following the 1.7 percent contraction in February.
Confidence among Japan’s small and medium-sized enterprises dropped more-than-expected in April, survey data released by the Shoko Chukin Bank showed Tuesday. The small business confidence index fell by 2.4 percentage points to 47.4 in April from 49.8 in the previous month. Economists had expected the index to drop to 49.0. It was the first decrease in three months.
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