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US Dollar Weakened by Disappointing Data

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US Dollar Weakened by Disappointing Data

The US dollar index declined for the third consecutive day, as disappointing economic data reminded the forex market the Federal Reserve won’t rush to reign in record stimulus.

The US dollar index declined nearly 0.2 percent to 80.01, as disappointing financial and housing data made their way through the markets. A series of volatile trade sessions last week saw the dollar index decline more than 0.6 percent over the previous five days.

US Treasury flows in December reached their lowest level in four years, according to the Treasury Department. Foreign net sales of long-term Treasury International Capital totaled $45.9 billion, compared to $28 billion the previous month. Data on net long-term TIC flow measure the difference between inflows and outflows of capital in the United States.

Meanwhile, a report from the National Association of Home Builders today showed the steepest decline in homebuilder confidence on record. The Housing Market Index fell 10 points to 46, the lowest reading since May 2013. Severe weather impacted housing activity in all three of the index’s main components, including current sales conditions, sales expectations and homebuyer traffic.

The euro surged against the US dollar, as forex traders shrugged off largely disappointing ZEW Survey data. The EURUSD pair rose to a session high of 1.3768. As of 19:00 GMT, the pair was trading at 1.3755, a gain of 49 pips.

The greenback also weakened against the Canadian dollar, which was idle Tuesday. The USDCAD pair declined 11 pips to 1.0950. Since the start of the month the USDCAD has lost more than 1.3 percent.

Not all news was bad, however. The greenback rebounded against the yen after the Bank of Japan announced plans to not only maintain expansionary monetary policy, but to extend special loan programs as well. Such programs, it is hoped, will help strengthen economic growth amid signs of slowdown. As of 19:00 GMT, the USDJPY was trading at 102.29, a gain of more than 0.3 percent.

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