Aug 08 2008
The Greenback Soars
The USD underwent a bullish trading session yesterday, as it appreciated against all of its major currency rivals. The dollar rose 0.5% and closed under 1.5320 versus the euro in yesterday’s trading session. Also, the USD saw steady gains against the GBP and CHF. The greenback saw significant bullishness yesterday as the Pending Home Sales beat our forecasts which showed an expected rise of 1%. Instead, the indicator rose 5.3% and added to another day of surprising US economic data supporting the USD. The indicator was also the first real sign of housing improvement in the US in recent history. Although foreclosures are accounted for in the figure, it is nice to see some positive housing numbers out of the US to support the latest bullish trend for the greenback in Forex trading. Yesterday’s numbers mark the second positive pending home sales this quarter, in June homes sales saw a 6.3% rise. In addition, the gain in pending home sales offset a bleak U.S. jobless claims report which saw a 35K rise from the expected mark of 420K. The swing in home sales, despite jobless data adds even more to the growing speculation that the housing sector has hit its bottom and will now begin to see steady growth. The data also backed expectations of U.S. rate hikes this year, which has fueled a rebound in the dollar over the past two weeks. Today we can expect a slower pace to the news cycle from the US as 3 events of lesser significance will be released. Preliminary Nonfarm Productivity and Unit Labor Costs along with Wholesale Inventories are forecasted to see positive gains, but should contribute little to volatility. If data returns inline with expectations we should see the Dollar’s resurrection continue as traders will look to infuse bullish USD positions.
