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European Session – Dollar boosted by GDP, pending home sales and consumer sentiment data

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Housing_1The euro made a slight recovery against the dollar during the European session, to reach a high of 1.1244 but fell sharply as the US session came around, to reach a low of 1.1175.

Positive news out of Europe today was that of Germany’s parliament approving an extension of Greece’s loan extension by four months.

Meanwhile, economic data helped support the single currency earlier in the European session as German inflation numbers printed higher-than-expected. The flash CPI reading for February increased by 0.9%, further than the 0.6% expected and up from the -1.1 percent drop in January. Focus now turns to the overall Eurozone inflation numbers due on Monday.

The next big risk event for the euro will be next week’s European Central Bank meeting as well as the market’s anticipation of the Bank’s launch of its bond buying program. The ECB agreed to embark on a 60 billion euro a month bond buying program last January 22nd in an effort to revive the Eurozone economy and fend off deflation.

The dollar was boosted after US fourth quarter GDP data. The preliminary reading was not as bad as economists had forecast, and showed the US economy grew at a 2.2% year-on-year. This was slower than the initial estimate of a 2.6% growth rate.  A 2.1% pace was forecast.  The dollar rose against the yen after the data to hit a high of 119.46, the highest level in the day so far.

Other US data also helped buoy the greenback. US pending home sales hit an 18-month high in January after climbing 1.7% from December’s revised 1.5% drop. Pending home sales are considered a good leading indicator of existing home sales. Other positive data showed the final University of Michigan consumer sentiment for February unexpectedly rose 1.8 points to 95.4, beating expectations of a 0.4 point gain to 94.0 from January’s 93.6 reading. The dollar remained steady after the home sales and sentiment data.

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