Forex- U.S. Dollar Continues to Hold as Sterling Slides

Investing.com – The U.S. dollar increased against other major counterparts on Tuesday, while sterling fell amid Brexit warnings from Bank of England Governor Mark Carney.

The dollar was supported by reports on Monday that U.S. President Donald Trump was favoring Stanford economist John Taylor to replace Federal Reserve Chair Janet Yellen next year. Trump is expected to meet with Yellen on Thursday about renewing her term.

The greenback was also bolstered by U.S. import and export prices rising higher than expected in September, according to data from the U.S. Bureau of Labor Statics on Tuesday.

Meanwhile, GBP/USD fell 0.54% to 1.3185 after Carney warned about the dangers of a no-deal Brexit on Tuesday. He said the bank had prepared for a “worst-case” scenario and noted British firms have become “less confident about a smooth transition” but that, to the contrary, “household expectations are broadly consistent with a smooth outcome to a future arrangement”.

Earlier on Tuesday data showed that U.K. inflation had hit a five-and-half year high in September, bolstering chances of a Bank of England rate hike.

EUR/USD slid 0.33% to 1.1757 after data showed that German economic sentiment rose much less than expected in October.

The yen inched forward 0.21% with USD/JPY at 112.42 while USD/CHF rose 0.36% to 0.9789.

The Australian dollar fell 0.22%, with AUD/USD at 0.7834, while NZD/USD lost 0.06% to trade at 0.7163.

Statistics New Zealand reported on Tuesday that consumer prices increased 0.5% in the third quarter, beating expectations for a 0.4% gain.

Year-over-year, consumer prices rose 1.9% in the three months to September, compared to expectations for a 1.8% gain.

Elsewhere, the Canadian dollar increased, with USD/CAD up 0.16% at 1.2536.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.33%, to 93.45 as of 8:52 AM ET (1:53 PM GMT).