Dollar up as Brexit fears contrast with solid U.S. data, Fed speakers

Tue Mar 28, 2017 4:28pm EDT
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By Dion Rabouin

NEW YORK (Reuters) - The dollar rose on Tuesday, bouncing from 4-month lows, as a top Federal Reserve official reinforced expectations of more U.S. rate hikes to come while political uncertainties surrounding Britain's exit from the EU pressured European currencies.

Fed Vice Chairman Stanley Fischer said two more increases of U.S. overnight interest rates this year seemed "about right" during a television interview.

Also lending support to the dollar was data on U.S. consumer confidence that showed a reading at the highest level in more than 16 years.

The dollar strengthened against most major currencies in midday trading after being flat to lower earlier in the day.

It was last up 0.6 percent against a basket of major currencies .DXY that measures its overall strength to 99.711, the strongest one-day percentage gain since March 1.

"Better consumer sentiment comes along with better consumption and spending, which is positive for the U.S. growth outlook," said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York.

Additionally, Harajli said, the dollar "fell quite a bit yesterday after the healthcare repeal kind of fell apart (on Friday), so we might be seeing a little bit of a bounce back after Monday's lows."

Still, analysts say they are expecting the dollar's long-term trajectory to turn lower as U.S. President Donald Trump struggles to get his campaign agenda of tax cuts and infrastructure spending through Congress.   Continued...

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration.  REUTERS/Dado Ruvic/Illustration/File Photo