• The dollar slipped to a fresh three-year low against a basket of currencies on Tuesday after data showed euro zone consumer confidence jumped much more than expected in January, underlining the strong momentum in the euro zone economy.
Some investors speculated that the recent bearish move in the dollar may be coming to a close amid concerns over the U.S. stance on global trade.
The dollar index, which measures the greenback against six rival currencies, was down 0.34 percent at 90.094, after slipping as low as 90.063, its lowest since December 2014.
• The euro EUR= was up 0.33 percent to $1.23 against the greenback.
The European Commission said consumer confidence in the 19 euro zone countries in January rose to 1.3 points from 0.5 point in December, well above the market consensus of a rise to 0.6.
• The ZEW Indicator of Economic Sentiment for Germany climbed 3.0 points in January 2018, currently standing at 20.4 points. The indicator thus still remains slightly below the long-term average of 23.7 points. The assessment of the current economic situation in Germany increased by 5.9 points, with the corresponding indicator currently standing at 95.2 points.
“The latest survey results reveal an optimistic outlook for the German economy in the first six months of 2018. With 95.2 out of 100 points, this is the most positive assessment of the current economic situation since the introduction of the survey in December 1991. Private consumption, which was the most important driver of economic growth in 2017, is likely to continue to stimulate growth in the coming six months according to the survey participants. The assessment of the global economic environment in Europe and the USA is also much more favourable than it was at the end of 2017,” comments ZEW President Professor Achim Wambach.
• The dollar failed to hold early gains against the Japanese yen after the Bank of Japan kept monetary policy unchanged.
On Tuesday, the BoJ said risks to prices were still tilted to the downside, though it did offer a more upbeat view on inflation expectations, saying they were “moving sideways recently.” In October, it described them as being on a weak note.
The greenback slipped about half a percent to 110.25 yen, its lowest since Wednesday.
• U.S. government debtyields fell Tuesday after Congressional leaders reached a temporary deal to keep the government open until Feb. 8.
The yield on the benchmark 10-year Treasury note fell to 2.628 percent at 1:06 p.m. ET, while the yield on the 30-year Treasury bond also slipped to 2.903 percent. Bond yields move inversely to prices.
• The stopgap funding bill passed by the U.S. Congress to end the government shutdown will add $31.3 billion to the national debt over a decade, congressional tax analysts said on Tuesday.
• A majority of the U.S. Senate on Tuesday voted to confirm Federal Reserve Governor Jerome Powell as the next head of the central bank, likely ensuring continuity in monetary policy.
• Lobbying by U.S. business groups including the U.S. Chamber of Commerce and the Business Roundtable surged in the last three months of 2017 as lawmakers negotiated and finalized legislation that deeply cut the taxes companies pay.
The amount spent on lobbying by the Business Roundtable, a group of chief executive officers at the largest U.S. companies, nearly quadrupled to $17.35 million in the fourth quarter from $4.53 million in the third quarter, according to lobbyist disclosures published on Monday.
• Democrats said on Tuesday they had withdrawn an offer to fund U.S. President Donald Trump’s border wall, as tough negotiations over the future of young illegal immigrants known as “Dreamers” resumed in the Senate.
• Officials opened a key round of negotiations to modernize NAFTA on Tuesday amidst optimistic signs, as U.S. President Donald Trump said the talks were going “pretty well” and Canada’s chief negotiator said he had high hopes for progress.
• Oil rose more than 1 percent on Tuesday, with benchmark Brent crude hitting $70 a barrel for the first time in a week, boosted by healthy world economic growth prospects and expectations for continued production curbs by OPEC, Russia and their allies.
U.S. West Texas Intermediate (WTI) crude futures CLc1 closed up 90 cents to $64.47 a barrel, for a gain of 1.4 percent. WTI reached its highest since December 2014 on Jan. 16 at $64.89.
Brent crude futures LCOc1 settled up 93 cents, or 1.4 percent, to $69.96, not far off the three-year high of $70.37 reached on Jan. 15.
Reference: Reuters, CNBC, zew.de
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