Yahoo Finance Dollar Pressured by Firmer Euro; Consumer Sentiment Misses Expectations
The U.S. Dollar fell against a basket of major currencies on Friday as demand for safe-haven assets dropped amid optimism that next week’s trade talks between the United States and China would ease tensions between the two economic heavy-weights and bring them closer to ending their trade dispute.
September U.S. Dollar Index futures settled at 96.330, down 0.2060 or -0.21%.
The dollar was also pressured by a firmer Euro, which strengthened against the greenback due to an easing of tensions over the fallout from the currency turmoil in Turkey.
Despite the setback on the daily chart, the dollar index still managed to close 0.12% higher for the week.
On Friday, the Turkish Lira snapped a three-day rebound, sliding more than 5 percent against the dollar on worries about the threat of more U.S. economic sanctions unless Turkey hands over detained American evangelical pastor Andrew Brunson.
The move didn’t cause the reaction seen in the markets earlier in the week because investors may be finally realizing that Turkey’s economy is relatively small. Additionally, its U.S. tariffs, not the Turkish economy that is driving the selling pressure. Furthermore, European banks face minimal exposure to the Turkish economy, which means any reaction to fears of contagion may have been overdone.
U.S. Treasury Markets
U.S. Treasury yields retreated on Friday despite potentially friendly headlines taking an optimistic viewpoint that next week’s meeting between the United States and China will eventually lead to an end of the ongoing trade dispute between the two major economic powerhouses. The price action suggests investors went home over the week-end on edge a little over the turmoil in Turkey.
The yield on the benchmark 10-year Treasury note was lower at 2.864, while the yield on the 30-year Treasury bond was lower at 3.02 percent.
Consumer Sentiment Hits Lowest Level Since September
The first look at consumer sentiment for the month of August came in below expectations. According to the University of Michigan, consumer sentiment hit 95.3 for August – the lowest level since September. Economists polled by Reuters were looking for the index to hit 98 in August, up from 97.1 in July.
Richard Curtin, chief economist of the university’s Survey of Consumers said the weakness “reflected much less favorable assessments of buying conditions, mainly due to less favorable perceptions of market prices.” Curtin noted, for example, that consumers viewed buying conditions for vehicles less favorably than at any time in the past four years, as “vehicle prices [are] being judged less favorably than any time since the close of 1984.”
“Overall, the data indicates that consumers have little tolerance for overshooting inflation targets, and to the benefit of the Fed, interest rates now play a more decisive role in purchase decisions,” he said. “As is usual at this stage in the business cycle, some price resistance has been neutralized by rising wages, although the falloff in favorable price perceptions has been much larger than ever before recorded.”
This article was originally posted on FX Empire
More From FXEMPIRE:
EUR/USD Weekly Price Forecast – Euro hanging on for dear life
USD/JPY Weekly Price Forecast – US dollar mixed against Japanese yen
Renewed Trade Talks, Easing of Contagion Fears Soften Dollar’s Bullish Performance
With Earnings Season Ending, Focus Will Shift to Geopolitical Events, Policy Changes
Crude Oil Price Forecast – crude oil markets close out the week on a strong note
