Theresa May thwarts dissent in her government for now

The dollar index continued to move lower on Tuesday, pressured by advances in the pound and euro as traders regained confidence in U.K. Prime Minister Theresa May and reacted to hawkish comments from a member of the European Central Bank.

The Turkish lira rebounded against the dollar after Monday’s tumble, which followed a diplomatic spat between Ankara and Washington.

Where are currencies trading?

The ICE dollar index DXY, -0.43% slipped 0.2% to 93.530, falling for a third straight session. The benchmark on Friday hit a 10-week high after the September U.S. jobs report was seen as strengthening the case for the U.S. Federal Reserve to raise interest rates in December.

The euro EURUSD, +0.4939% climbed to $1.1775 on Tuesday from $1.1743 late Monday in New York.

The pound GBPUSD, +0.4033% rose to $1.3184, compared with $1.3141 on Monday, while the yen USDJPY, -0.34% rose to ¥112.41 to the dollar from ¥112.68 on Monday.

The dollar USDTRY, -0.4701% slumped to 3.6831 Turkish lira from 3.7011 lira on Monday. The lira tumbled against the greenback on Monday to a six-month low after Turkey and the U.S. stopped issuing nonimmigrant visas to each other’s citizens, after Turkey arrested a Turkish employee who worked at the U.S. consulate in Istanbul.

What’s driving the market?

The euro was boosted by hawkish comments from ECB executive board member Sabine Lautenschlaeger, who said on Monday the central bank should start scaling back its aggressive bond buying program next year. Traders are expecting an update on the future of the asset-purchase program when policy makers meet later in October.

Euro traders were also monitoring the situation in Catalonia, where separatist leader and Catalan President Carles Puigdemont may declare the region’s independence from Spain later in the day.

Meanwhile in the U.K., the pound got a lift from the latest developments in the country’s political drama, with Prime Minister May seen as warding off dissent within her government for now.

Continue Reading