Strong rise in US consumer confidence due to trade and political concerns
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The dollar rose slightly against a basket of currencies on Tuesday, boosted by trade and political concerns and a strong rise in consumer confidence in the United States, despite a 19-month low in longer-term Treasury yields.
Investors were relieved by the fall in the euro as pro-European parties won a majority of seats in the European Parliament, but they remain uneasy about the future of the eurozone as suspicious and right-wing parties win more seats.
Despite the return of U.S. and British traders from vacation, foreign exchange trading remained light.
"There is some risk aversion in the current market, which is good for the dollar." Chuck Tomes, Deputy portfolio manager at Manulife Asset Management in Boston, said.
The dollar further strengthened after the American Economic Consultative Council announced that the US consumer confidence index rose to 134.1 in May, the highest level since November, after analysts had expected it to be 130.
In late New York trading, the dollar index, which tracks the trend of the dollar against the euro, the yen, the pound and three other currencies, rose 0.19% to 97.919.
The dollar index reached a two-year high of 97.908 last week.
Earlier, U.S. benchmark 10-year bond yields fell to 2.264%, after U.S. President Trump hinted that the United States and China were far from reaching a trade agreement. This is the lowest yield on 10-year Treasury bonds since October 2017. Because of trade concerns and political uncertainty, investors have been buying a lot of safe-haven U.S. Treasuries.
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