The euro and pound may strengthen following a drop in U.S. consumer confidence, CMC Markets said.
The decline “could play further into the yield differential story, to the benefit of the euro and pound as the 3.05 percent cap in U.S. bond yields works to the relative advantage of non-dollar foreign exchange,” Ashraf Laidi, chief market strategist at CMC in London, wrote in a note yesterday. “U.K. and German bond yields have extended their run-up.”
The Conference Board’s sentiment index fell to 50.4, below the median forecast of economists surveyed by Bloomberg and the lowest level in five months, figures from the New York-based private research group showed yesterday.
The euro climbed 0.2 percent to $1.3024 as of 8:27 a.m. in London while the pound was little changed at $1.5590.