Dollar Trims Losses On Solid Housing Data While Oil Puts Market On Edge
The dollar strengthened against its peers today following the release of better than forecast US existing home sales data after yesterday’s release of discouraging housing sector data. US existing home sales climbed 5.1% in March from February’s total of 5.07 million units to 5.33 million units while experts forecast a rise of 3.5% to 5.30 million. Data released yesterday revealed that US building permits dropped suddenly by 7.7% in March to total 1.086 million units while housing starts decreased by 8.8% to 1.089 million. Even though the dollar erased losses the market was on edge as oil prices pushed lower following 3 days of worker strikes in Kuwait which reduced the country’s crude production by roughly half. The US dollar index was up 0.20% trading at 94.26 off its session low of 93.30.
The euro weakened against the dollar with the pair down 0.41% trading at 1.1313 off its session low of 1.1301 after having come off its session high of 1.1388 reached earlier in the day. Speculative activity in options markets leading up to the European Central Bank’s policy meeting on Thursday and European stock market gains boosted the euro earlier in the session. Analysts expect the ECB to make no changes to its policy and that the euro will not be shaken as a result.
The pound weakened against the dollar with the pair up 0.17% trading at 1.4373 off its session high of 1.4410 after having come off its session low of 1.4344 reached earlier in the day. The pound came off 3 week highs after data showed that the number of unemployed in the UK increased while wage growth came in below forecasts. The UK Office for National Statistics released data which revealed that UK unemployment remained at a rate of 5.1% in the 1st quarter matching forecasts. UK jobless claims increased surprisingly in February by 6,700 while experts forecast a decline of 11,300 following a decrease of 9,300 in January. The data marked its 1st increase since August 2015. UK’s average earnings index with bonuses climbed 1.8% in the 1st quarter compounding forecasts for a rise of 2.3%. Average earnings excluding bonuses were up 2.2% matching market expectations.
The yen weakened against the dollar with the pair up 0.50% trading at 109.75 off its session high of 109.82 after having come off its session low of 108.76 reached earlier in the day. The yen had strengthened earlier in the session as the drop in oil prices soiled market outlook dampening risk appetite. Data revealed that Japan’s trade balance rose from 242.8 billion yen in February to 775.0 billion yen in March. The value of exports dropped 0.7% for the 1st time in 3 years at 74.12 trillion yen. The decline in exports can be attributed to a stronger yen and the Bank of Japan has already announced its readiness to intervene to weaken the yen. Bank of Japan Governor Haruhiko Kuroda reconfirmed the central bank’s readiness to advance its monetary policy in order to reach its target for inflation.
The Australian and Canadian dollars strengthened while the New Zealand dollar weakened against the greenback. Commodity associated currencies were pushed higher as risk appetite was boosted on the back of European stock market gains. An earlier decline in oil prices had pressured the Aussie and the loonie from multi-month highs hit yesterday however once oil trimmed losses they garnered some support.
The Aussie was up 0.03% trading at 0.7815 off its session high of 0.7829 after having come off its session low of 0.7767 reached earlier in the day. The kiwi dollar declined 0.84% against the greenback with the pair trading at 0.6985 off its session low of 0.6975 after having come off its session high of 0.7049 reached earlier in the day. The loonie advanced 0.42% against the dollar with the pair trading at 1.2616 off its session low of 1.2592 after having come off its session high of 1.2729 reached earlier in the day. The pair had traded steadily at 1.2678 near its 9 month low of 1.2631 hit in the previous session. The loonie had weakened momentarily on the back of data which revealed that Canadian wholesales decreased by 2.2% in February compounding forecasts for a 0.3% decline following a 0.2% increase in January.
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