Forexpros – The U.S. dollar traded broadly lower against its major rivals Tuesday, as world currency sentiment strengthened ahead of highly anticipated policy meetings by the Federal Reserve and the European Central Bank this week.
During U.S. afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.29% to 1.2296.
Expectations have been increasing that the ECB will announce bold measures to tackle the long running debt crisis after central bank head Mario Draghi pledged last week to do whatever is necessary to preserve the euro.
However, investors remained wary amid concerns that an inadequate policy response by the ECB could send markets lower.
Germany is opposed to granting a banking license to the bloc’s bailout fund and to the resumption of the ECB’s bond buying program.
Market participants were also eyeing the outcome of the Fed’s policy setting meeting on Wednesday, amid speculation over whether the U.S. central bank will indicate if further quantitative easing measures are imminent.
Meanwhile, the euro was little changed after official data showed that the rate of consumer price inflation in the euro zone remained steady at 2.4% in July.
A separate report showed that the unemployment rate in the bloc rose to 11.2%, a new record high in July.
Germany’s unemployment rate remained steady at 6.8% in July, but Italy’s unemployment rate rose to 10.8% in June, the highest level since quarterly records began in 1999.
The greenback was higher against the pound, with GBP/USD falling 0.23% to 1.5674.
The pound remained under pressure after data last week showing a steeper than expected contraction in U.K. economic growth in the second quarter.
The Bank of England was to hold its monthly rate setting meeting on Thursday, but was not widely expected to announce any change to current monetary policy.
Elsewhere, the greenback was steady against the yen, with USD/JPY easing 0.01% to hit 78.16, and fell against the Swiss franc, with USD/CHF retreating 0.29% to trade at 0.9769.
Earlier in the day, a report showed that manufacturing activity in Japan remained in contraction territory for the second consecutive month in July.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.09% to 1.0024,AUD/USD adding 0.15% to 1.0519 and NZD/USD edging up 0.19% to trade at 0.8105.
The National Bank of New Zealand said earlier that its index of business confidence rose to 15.1 in July, from a reading of 12.6 the previous month.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% to 82.76.
Also Tuesday, a U.S. report showed that the Chicago purchasing managers’ index rose to 53.7 in July, from a reading of 52.9 the previous month and defying expectations for a decline to 52.5.
In other news, the Conference Board reported U.S. consumer confidence rose to 65.9 in July, from 62.7 in the preceding month, beating expectations for a reading of 61.5.
A separate report revealed U.S. personal spending was flat in June, in line with expectations, while personal income rose 0.5%, slightly better than expectations for a 0.4% increase.
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