New Home Sales Drive US Dollar
The US dollar rose Wednesday, as a surge in new home sale last month boosted confidence in US recovery.
New home sales rose 9.6 percent in January, the Commerce Department reported today. The unexpected rebound boosted confidence in the housing market, which experienced a downturn in the second half of last year, as rising mortgage rates and low inventory kept would-be buyers out of the market.
The US dollar gained more than 0.3 percent against a basket of currencies, sending the US dollar index to 80.40. The greenback has experienced a volatile five days, as mixed economic data reminded the forex market the Federal Reserve probably won’t rush to put an end to quantitative easing.
The greenback strengthened against the euro, which struggled to translate positive data into gains. The EURUSD pair fell to its lowest level in nearly two weeks, as the markets shrugged off stronger than forecast German consumer confidence data. The pair fell to a session low of 1.3662 in North America. As of 19:00 GMT, the EURUSD was trading at 1.3685, a loss of 60 pips.
The USDCAD rose comfortably above the 1.11 level, as the markets continued to bid down the Canadian dollar ahead of Friday’s annualized GDP readings. As of 19:00 GMT, the pair was trading at 1.1128, a gain of 48 pips.
The USDJPY rose nearly 0.2 percent to 102.37, remaining well within the pair’s two-week range. A relatively uneventful front half of the week gave the pair very little reason to break out. With several high profile releases on deck in the back half, the pair could experience volatility. Japan will report on consumer inflation, unemployment and retail trade to close out the week, while the US will release data on durable goods and GDP.
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