The U.S. Dollar reversed earlier gains against a basket of currencies on Tuesday to finish lower for the session. Traders were spooked by solid economic data from the Euro Zone and general nervousness ahead of President Trump’s first State of the Union speech Tuesday night and the start of the U.S. Federal Reserve’s two-day meeting.
March U.S. Dollar Index futures settled at 88.999, down 0.132 or -0.15%.
The index traded higher early in the session on the back of yesterday’s rally which was fueled by a spike in U.S. Treasury yields. The 10-year U.S. Treasury Note yield pushed well above 2.70 percent, their highest since April 2014. This prompted some investors to cut some short positions, pushing the U.S. Dollar higher against the major currencies.
U.S. Economic News
U.S. national home prices continued their run higher in November, rising 6.2 percent annually on S&P CoreLogic Case-Shiller’s most broad survey, up from 6.1 percent in October. Another S&P Index of the nation’s 20 largest housing markets showed a 6.4 percent gain, higher than analysts had expected.
Prices nationally are now 6 percent higher than their 2006 peak, while those in the top 20 markets are still 1.1 percent lower. The report also demonstrated that the supply crisis in the housing market is not letting up, and consequently neither are the gains in home values.
The Conference Board Consumer Confidence report came in at 125.4, well above the 123.2 estimate. The previous report was revised upward to 123.1.
“Expectations improved, though consumers were somewhat ambivalent about their income prospects over the coming months, perhaps the result of some uncertainty regarding the impact of the tax plan,” Lynn Franco, Director of Economic Indicators at The Conference Board, said in a statement.
“Consumers remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018,” Franco said.
Gold
Gold closed lower on Tuesday despite the weaker U.S. Dollar and a steep drop in U.S. stock markets. The market is under pressure this week primarily due to a sharp rise in global interest rates. Traders are also nervous ahead of President Trump’s annual State of the Union speech, the start of the Fed’s two-day meeting and Friday’s U.S. Non-Farm Payrolls report.
Crude Oil
U.S. West Texas Intermediate and international-benchmark Brent crude oil continued to weaken on Tuesday. Uncertainty over the direction of the U.S. Dollar ahead of President Trump’s State of the Union speech on Tuesday night and the release of the U.S. Federal Reserve’s monetary policy statement on Wednesday also encouraged investors to pare their long positions.