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US Dollar Steady after Strong PMI, Home Sales Data

H.S. Borji
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US Dollar Steady after Strong PMI, Home Sales Data

The US dollar was steady Monday against a basket of currencies, as a booming manufacturing sector supported the view the US economy is rebounding strongly in the second quarter.

The US dollar index, a broad performance gauge of the greenback’s strength against six commonly traded peers, was at 80.35, virtually unchanged from the previous close.

The US manufacturing industry in June expanded at the sharpest pace in more than four years, as domestic demand fueled output growth and new business orders, Markit Group reported today. The gauge of manufacturing activity increased from 56.4 to 57.5, beating forecasts.

Markit said US manufacturers added 12,000 payrolls in June, which means the broader economy probably added around 200,000 payrolls this month.

Second quarter GDP is forecast to grow 3 percent, according to Markit chief economist Chris Williamson.

Markit will report on the US service economy Wednesday.

In a separate report the National Association of Realtors said US existing home sales increased 4.9 percent to 4.89 million in May, well above forecasts. Home sales were supported by slower price growth last month.

Total housing inventory at the end of May was 2.2 percent higher than a month ago, representing a 5.6-month supply at the current sales pace.

The Commerce Department will report on new home sales Tuesday.

The EURUSD was unchanged in Monday’s North American session, trading at 1.3588. Initial support is likely found at 1.3564 and resistance at 1.3636.

In Eurozone data, Markit Group released a series of disappointing PMI data that were below forecasts, as France fell further into contraction.

The Eurozone PMI composite indicator for June declined from 53.5 to 52.8.

The GBPUSD heldt steady at 1.7013, unchanged from the previous close. The pair faces initial support at 1.6989 and resistance at 1.7049.

The greenback weakened against the Japanese yen, as the USDJPY declined 0.16 percent to 101.88. Initial support is likely found at 101.68 and resistance at 102.34.

The greenback lost more momentum against the Canadian dollar, which was supported by stronger inflation and retail sales data Friday. The USDCAD declined 0.26 percent to 1.0729. The pair is testing the 1.0729 support. Key resistance is marked at 1.0808.

The dollar is expected to face heavy price action this week as the economic calendar continues to heat up. The dollar index declined in the latter half of the previous week after the Federal Reserve suggested it would be slow to raise interest rates over the next several years. Top central bank policymakers said they expect long-term interest rates to trend below the historical average of 4 percent, supporting the view that any rise in the cost of borrowing would be slow and gradual.

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