WASHINGTON (dpa-AFX) - Investors have shifted their attention to riskier investments Tuesday, after last Friday's U.K. referendum result drove them to hide in safe havens. As the initial shock of the British exit of the European Union has subsided, traders have begun to exit investments in gold and the Japanese Yen in favor of riskier options.
The dollar is turning in a mixed performance this afternoon, rising against the Japanese Yen, but losing ground against its major European rivals. After yesterday's data drought, traders were hit with U.S. GDP and consumer confidence data this morning.
Economic activity in the U.S. increased faster than previously estimated in the first quarter of 2016, according to a report released by the Commerce Department on Tuesday. The Commerce Department said the pace of growth in gross domestic product was upwardly revised to 1.1 percent from the previous estimate of 0.8 percent.
The revised GDP growth in the first quarter compares to the 1.4 percent jump seen in the fourth quarter and the 1.0 percent increase expected by economists.
Consumer confidence in the U.S. improved by much more than expected in the month of June, the Conference Board revealed in a report on Tuesday. The Conference Board said its consumer confidence index jumped to 98.0 in June from a downwardly revised 92.4 in May.
Economists had been expecting the index to inch up to 93.3 from the 92.6 originally reported for the previous month.
The dollar fell to a low of $1.1111 Tuesday morning, but has since bounced back to around $1.1035.
Germany's import prices decreased at a slower-than-expected pace in May, figures from Destatis showed Tuesday. The import price index fell 5.5 percent year-over-year in May, slower than the 6.6 percent decline in April, which was the biggest fall since October 2009 Economists had expected a 5.8 percent drop for the month.
France's consumer confidence dropped marginally as expected in June, after strengthening strongly in the previous month, figures from the statistical office INSEE showed Tuesday. The consumer confidence index fell to 97 in June from 98 in May, which was the highest level since October 2007. In March, the reading was 94.
Standard & Poor's Global Ratings downgraded the sovereign ratings of the U.K. by two notches as the 'Brexit' will weaken the predictability, stability and effectiveness of policymaking. S&P lowered the ratings of the U.K. to 'AA' from 'AAA' and the outlook remained negative.
According to S&P, the lack of clarity will hurt confidence, investment, GDP growth and public finances. 'Uncertainty surrounding possibly long-lasting negotiations around what form the U.K.'s new relationship with the EU will look like will also pose risks,' the agency said.
Fitch Ratings also trimmed the U.K. ratings, but by one notch to 'AA' from 'AA+'. Fitch said the uncertainty following the referendum outcome will induce an 'abrupt' slowdown in short-term GDP growth, as businesses defer investment and consider changes to the legal and regulatory environment.
The buck dipped to a low of $1.3419 against the pound sterling Tuesday, but has since risen back to around $1.3325.
U.K. retail sales registered a weak growth in June, the Distributive Trades Survey from the Confederation of British Industry showed Tuesday. The retail sales balance fell to +4 percent from +7 percent in May. Nonetheless, it was better than the -5 percent balance predicted in May.
The greenback has climbed to around Y102.750 against the Japanese Yen this afternoon, from an early low of 101.542.
Copyright RTT News/dpa-AFX