Dollar Bounces Off Lows; Sterling Pulls Back From 6 Month High

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Includes: FXB, GBB, UDN, USDU, UUP
by: Investing.com

The dollar rose against a basket of major currencies on Wednesday, but failed to recover losses sustained in the previous session as geopolitical events weighed on sentiment while a drop in June rate hike expectations capped gains.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, rose by 0.28% to 99.69 by 18:07 EDT.

Geopolitical events continued to play a leading role across markets, after a North Korea official said on Monday, the Kim Jong Un led nation would continue to regularly test missiles.

Meanwhile, expectations of a June rate hiked edged lower amid weaker than expected economic data and softer U.S. economic growth expectations, after Treasury Secretary Steven Mnuchin admitted that the Trump administration no longer expects to complete tax reform by August.

According to Investing.com's fed rate monitor tool, 40% of traders expect the Federal Reserve to hike interest rates in June, compared to 52.8% of traders in the previous week.

Sterling hit a six-month high against the dollar, buoyed by expectations that UK Prime Minister Theresa May would comfortably increase her parliamentary majority in the general election, after the British Parliament approved May's call for an early election.

GBP/USD pulled back from six-month highs to trade at $1.2784, down 0.45%.

Meanwhile, EUR/USD traded at $1.0711 while EUR/GBP added 0.26% to 0.8378, as investors eyed the first round of the French presidential election, scheduled for April 23.

USD/JPY traded at 108.87, up 0.41%, while USD/CAD rose by 0.64% to $1.3467.

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