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Dollar remains broadly lower, eyes on Fed

Published 08/28/2012, 09:35 AM
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Investing.com - The U.S. dollar remained broadly lower against its major counterparts on Tuesday, despite positive U.S. house price data, as investors continued to focus on an upcoming speech by Federal Reserve Chairman Ben Bernanke, scheduled on Friday.

During European afternoon trade, the dollar was sharply lower against the euro, with EUR/USD rising 0.50% to 1.2563.

The greenback was little changed after a report showed that the Standard and Poor’s/Case Shiller House Price Index rose 0.5% in the second quarter, following a 0.7% decline the previous quarter.

Analysts had expected the index to fall 0.1% in the last quarter.

Market participants were looking ahead to a speech by Fed Chairman Ben Bernanke at an annual symposium in Jackson Hole, Wyoming, on Friday, amid ongoing speculation over how close the U.S. central bank is to implementing more stimulus measures.

Meanwhile, the euro gained ground after the European Central Bank said President Mario Draghi would not be attending the summit, due to his "heavy workload" in the next few days.

The unexpected announcement fuelled expectations that the ECB is working on policy measures to help stabilize the euro zone's sovereign debt markets, ahead of its next policy meeting on September 6.

The ECB president had been due to speak at the summit on Saturday, one day after a keenly anticipated speech by Fed Chairman Ben Bernanke.

Also Tuesday, Italy saw borrowing costs fall sharply at an auction of two-year government bonds.

Italy’s Treasury sold EUR3.0 billion of bonds maturing in May 2014, the top end of the targeted range, at an average yield of 3.06%, down from 4.86% at a similar auction last month.

Meanwhile, the greenback was fractionally lower against the pound, with GBP/USD easing up 0.07% to 1.5804.

Elsewhere, the greenback was lower against the yen and the Swiss franc, with USD/JPY falling 0.25% to hit 78.54, and USD/CHF declining 0.54% to trade at 0.9558.

Earlier in the day, the Japanese government cut its view of the economy for the first time in 10 months, as slowing exports weighed on production and consumer spending failed to expand.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 0.50% to 0.9859, AUD/USD inching 0.06% higher to 1.0374 and NZD/USD retreating 0.36% to trade at 0.8056.

In Australia, industry data showed that new home sales fell 5.6% in July, after a 2.8% increase the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.41% to 81.36.

Later in the day, the U.S. was to release a report on consumer confidence.


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