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Strong Data Releases Boost US dollar

H.S. Borji
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Strong Data Releases Boost US dollar

The US dollar was higher Tuesday after consumer confidence rose to its highest level in more than six years and new home sales surged at a double-digit pace.

The US dollar index, a broad gauge of the greenback’s performance against six peers, climbed 0.15 percent to 80.39. The index has declined 0.3 percent since June 18.

In economic data, US consumer confidence increased in June to the highest level since January 2008, the Conference Board reported today. The consumer confidence index increased from 82.2 to 85.2.

Economists forecast a gain to 83.6.

“June’s increase was driven primarily by improving current conditions, particularly consumers’ assessment of business conditions,” said Conference Board director of economic indicators Lynn Franco. “Expectations regarding the short-term outlook for the economy and jobs were moderately more favorable, while income expectations were a bit mixed. Still, the momentum going forward remains quite positive.”

A separate release from the Commerce Department showed new home sales in May rose to 504,000, the highest level since May 2008. The 18.6 percent advance in May was also the biggest since 1992.

Economists forecast new home sales to rise to 440,000 last month.

Compared to May 2013, new home sales were up 16.9 percent.

US data releases continue Wednesday with government reports on durable goods orders and gross domestic product.

The USDJPY advanced 0.2 percent to 102.13. The pair is currently testing initial resistance at 102.11. On the downside, initial support is likely found at 101.78.

Bank of Japan Governor Haruhiko Kuroda said on Monday the government would need to do more to ensure Japan meets its G20 commitments. Kuroda forecasts a temporary decline in consumer inflation over the summer. Over the weekend, Kuroda seemed optimistic the BOJ would reach its inflation target by 2015.

The GBPUSD tumbled 0.33 percent to 1.6969 after Bank of England Governor Mark Carney tempered rate hike expectations in a testimony before lawmakers on Tuesday. Carney said any plans to raise the benchmark interest rate would be slow and gradual, and dependent on economic data.

The GBPUSD faces support at 1.6955 and resistance at 1.7051.

The EURUSD declined 0.1 percent to 1.3590. Initial support is located at 1.3580 and resistance at 1.3621.

Eurozone data continued to disappoint the markets Tuesday, as German business confidence declined in June. The Ifo Institute’s business climate indicator fell from 110.4 to 109.7, as geopolitical tensions in Eastern Europe and violence in Iraq weighed on sentiment.

The USDCAD rebounded slightly, advancing 0.07 percent to 1.0740. The pair faces initial support at 1.0711 and resistance at 1.0759.

The Canadian dollar has been well supported since Friday after Statistics Canada said consumer inflation in May rose at the fastest pace in more than two years, while retail sales reached an 11-month high.

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