U.S. Dollar Extends Rally On Upbeat Housing Data
20 May 2015 - 12:00AM
RTTF2
The U.S. dollar continued its rise against the other major
currencies in early New York deals on Tuesday, as the housing
starts in the U.S. improved to a 7-1/2-year high in April,
signaling that the Fed could raise interest rates later this
year.
A report from the Commerce Department showed that housing starts
surged up 20.2 percent to an annual rate of 1.135 million in April
from the revised March estimate of 944,000.
Economists had expected housing starts to climb to a rate of
1.029 million from the 926,000 originally reported for the previous
month.
With the bigger than expected increase, housing starts reached
their highest level since hitting 1.197 million in November of
2007.
Building permits, an indicator of future housing demand, also
increased by 10.1 percent to an annual rate of 1.143 million in
April from the revised March rate of 1.038 million.
Traders now focus on the Federal Reserve's minutes of its April
meeting, due tomorrow, for further direction on interest rate
outlook.
The greenback added onto Monday's gains in the previous session.
It rose 0.52 percent against the yen, 1.16 percent against the
franc, 1.14 percent against the euro and 0.46 percent against the
pound yesterday.
The greenback appreciated to an 8-day high of 1.5446 against the
pound, up by 1.31 percent from Monday's closing value of 1.5651.
Continuation of the greenback's uptrend may lead it to a resistance
surrounding the 1.54 zone.
The pound saw heavy selling pressure after data showed that U.K.
consumer prices turned negative in April.
Data from the Office for National Statistics showed that U.K.
consumer prices fell 0.1 percent in April from last year, while it
was forecast to remain flat as seen in March.
The greenback added 1.56 percent to hit a weekly high of 1.1135
against the euro, from yesterday's closing value of 1.1312. The
greenback is seen finding support around the 1.10 area.
The euro has been sliding after comments from an ECB official
that the lender would moderately frontload its purchase activity in
May and June.
Benoît Cœuré, member of the Executive Board of the ECB, said at
a conference on Monday, "...we are also aware of seasonal patterns
in fixed-income market activity with the traditional holiday period
from mid-July to August characterised by notably lower market
liquidity."
The greenback spiked up to 2-week highs of 0.9376 against the
Swiss franc and 120.45 against the yen, up from Monday's closing
values of 0.9261 and 119.97, respectively. On the upside, the
greenback is likely to find resistance around 0.95 against the
franc and 121.00 against the yen.
The greenback strengthened to 1.2220 against the loonie, a level
unseen since April 23. This marks a 0.52 percent increase from
Monday's closing quote of 1.2157. The greenback is poised to test
resistance around the 1.25 level.
Extending early rise, the greenback rallied to a weekly high of
0.7924 against the aussie. This may be compared to Monday's closing
quote of 0.7986. Extension of the greenback's rally may lead to a
resistance around the 0.787 area.
Reversing from an early low of 0.7444 against the NZ dollar, the
greenback climbed back to 0.7367. The greenback is thus approaching
closer to its early 6-day high of 0.7358. If the greenback extends
rise, 0.73 is possibly seen as its next resistance level.
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