US US Dollar slips on weak housing data, as investors focus on the Fed
New York (Oct 26) The dollar fell against most of its rivals Monday after weaker-than-expected data on the U.S. housing market, as investors shift their focus to monetary policy moves by central banks.
The U.S. currency dropped against the euro EURUSD, +0.2814% which rose to $1.1045 from $1.1020 late Friday, after reaching as low as $1.0989, its lowest since Aug. 11. The shared currency held to higher ground Monday after an Ifo survey showed sentiment among German business managers deteriorated by less than expected in October.
The U.S. currency USDJPY, -0.36% was at 120.73 yen, after reaching as high as ¥121.60 earlier in the session, its highest since Aug. 31. That compared with ¥121.45 late Friday in New York.
The WSJ Dollar Index BUXX, -0.22% a measure of the dollar against a basket of major currencies, was 0.3% lower at 88.39, down from 88.65 on Friday. The ICE U.S. Dollar index DXY, -0.26% a measure of the dollar’s strength against a basket of six rivals, lost 0.2% at 96.89, down from 97.09 on Friday.
The declines came after data showed the pace of new-home sales in the U.S. sank 11.5% in September to the lowest level in 10 months, owing to an unusually large dropoff in the Northeast. Wall Street had expected sales to level off after a strong surge earlier in the year, but the drop was much sharper than seen.
Earlier on Monday, the greenback was moving lower as investors booked a profit on recent advances in the buck. The moves were propelled by an improved appetite for assets perceived as risky, such as global stocks.
Last week, comments from European Central Bank President Mario Draghi helped brighten the risk sentiment, leading to rallies in eurozone stocks. Draghi hinted on Thursday the door is open at the central bank for further stimulus at its December meeting.
In addition, China’s decision to further loosen its monetary grip,via its sixth cut in benchmark interest rates since November last year, helped boost sentiment. Alongside upbeat U.S. earnings, the People’s Bank of China decision contributed to driving U.S. stocks higher on Friday.
Investors are waiting to see what the Federal Reserve will decide on interest rates at its meeting this week, with a policy statement expected Wednesday. The Bank of Japan is also expected to release a decision on Friday.
Read: Now, there is little chance of a Federal Reserve rate hike in 2015
“Amid a recovery in riskier assets ... the dollar gets easily supported against the yen,” said said Shinichiro Kadota, vice president of research at Barclays in Tokyo.
The BOJ’s likely inaction later this week may bring down the dollar against the yen. But “as long as the possibility of a BOJ easing remains pervasive, it is difficult to assume a considerably higher yen,” said FPG Securities chief executive Koji Fukaya.
In other currency trade pairs, the euro EURJPY, -0.04% was at ¥133.39 from ¥133.77.
The pound GBPUSD, +0.2351% bought $1.5375, up from $1.5314 late Friday in New York. Investors on Tuesday will look for the first reading of U.K. gross domestic product for the third quarter.