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Dollar Paring Early Gains As Yellen Hints At Rate Hike

EUR USD4 092617

The dollar climbed against all of its major rivals Tuesday morning, but has pared its gains in the afternoon. The reversal occurred around the same time that Federal Reserve Chair Janet Yellen hinted at imminent rate hikes.

"We should be wary of moving too gradually," Yellen said in a speech to the National Association for Business Economics meeting in Cleveland.

"Given that monetary policy affects economic activity and inflation with a substantial lag, it would be imprudent to keep monetary policy on hold until inflation is back to 2%," she said.

New home sales in the U.S. unexpectedly showed a sharp decrease in the month of August, according to a report released by the Commerce Department on Tuesday. The Commerce Department said new home sales tumbled by 3.4 percent to an annual rate of 560,000 in August from the revised July rate of 580,000.

The decline surprised economists, who had expected new home sales to climb to a rate of 583,000 from the 571,000 originally reported for the previous month.

A report released by the Conference Board on Tuesday showed a deterioration in U.S. consumer confidence in the month of September.

The Conference Board said its consumer confidence index dropped to 199.8 in September from a revised 120.4 in August. Economists had expected the index to slide to 120.2 from the 122.9 originally reported for the previous month.

The dollar climbed to a 1-month high of $1.1755 against the Euro Tuesday, but has since retreated to around $1.18.

Germany's import price inflation accelerated in August on higher intermediate and energy prices, data from Destatis showed Tuesday.

Import prices advanced 2.1 percent year-on-year in August, faster than the 1.9 percent increase seen in July. The annual rate came in line with expectations.

Export price inflation held steady at 1.5 percent in August.

France's manufacturing confidence weakened slightly in September, survey data from the statistical office Insee showed Tuesday. The business confidence index among manufacturers fell to 110 in September from 111 in August. The reading was forecast to remain unchanged at 111.0.

The buck rose to over a 1-week high of $1.3408 against the pound sterling Tuesday, but has since eased back to around $1.3460.

UK mortgage approvals increased to a six-month high in August, data published by the UK Finance showed Tuesday. The number of mortgage approvals rose to 41,807 in August from 41,644 in July. This was the highest since February, when it totaled 42,328.

Members of the Bank of Japan's Monetary Policy Board said that Japan continues to experience a moderate economic expansion, minutes from the bank's July 19-20 meeting revealed on Tuesday.

Overseas economies also are growing steadily, the minutes added, which has led to a bump in Japanese exports.

"Exports had been on an increasing trend on the back of a pick-up in emerging economies. Those to advanced economies continued on their increasing trend; those to emerging economies had picked up, led mainly by electronic parts and capital goods to Asia. Exports would likely continue their increasing trend for the time being," the minutes said.

The greenback reached a high of Y112.479 against the Japanese Yen Tuesday, but has since slipped to around Y112.160.

Producer Prices in Japan were up 0.8 percent on year in August, the Bank of Japan said on Tuesday, topping forecasts for 0.6 percent, which would have been unchanged from the July reading.

On a monthly basis, producer prices fell 0.2 percent after rising 0.3 percent in the previous month.

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