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FOREX-Dollar weak after U.S. data fails to boost rate outlook
June 27, 2014 / 2:50 PM / 3 years ago

FOREX-Dollar weak after U.S. data fails to boost rate outlook

(Adds comments, changes byline, dateline, previous LONDON)

* U.S. consumer sentiment beats expectations

* Dollar falls against yen on risk aversion

By Sam Forgione

NEW YORK, June 27 (Reuters) - The U.S. dollar edged lower on Friday against a basket of major currencies and looked set for a second week of losses after positive data on consumer sentiment failed to boost expectations for a rise in interest rates any time soon.

The Thomson Reuters/University of Michigan’s final June reading on the overall index on consumer sentiment came in at 82.5, up from 81.9 the month before and above the median forecast of 82.0 among economists polled by Reuters.

Analysts said the upbeat consumer sentiment data left traders cold since it failed to dispel worries about the U.S. economy after data on Thursday showed slightly weaker-than-expected data on consumer spending in May and weekly jobless claims.

“Confidence is higher but it’s not being reflected right now in spending,” said Chris Gaffney, senior market strategist at EverBank Wealth Management in St. Louis. “It’s overall weakness of the U.S. recovery, and therefore rates are probably going to stay lower longer.”

Traders are watching data closely for signs of when the Fed will raise interest rates from rock-bottom levels.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last down 0.14 percent at 80.107. The euro was last up 0.14 percent against the dollar at $1.3631.

The dollar was last down 0.31 percent against the yen at 101.40 yen. The dollar was down 0.22 percent against the Swiss franc to trade at 0.89155 franc. The pound edged 0.09 percent lower to trade at $1.7015 after gains on Thursday.

Analysts said the yen gained on safe-haven bids on the concerns surrounding the U.S. economy, while there was little sign that the Bank of Japan would announce more monetary stimulus any time soon.

Recent economic data has diminished pressure on the BoJ to further stimulate Japan’s economy, resulting in a stronger yen in relation to the dollar, said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

Lower U.S. bond yields weighed on the dollar. Benchmark 10-year U.S. Treasury notes were last up 3/32 in price to yield 2.51 percent. (Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by James Dalgleish)

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