The dollar diminished against the euro last week following the fragile U.S. housing data stoked concerns regarding the American economy, but still remained on track for its week of hefty gains against a basket of major economy in three consecutive weeks.
The greenback was able to rise to a three-week high as against the yen. According to the National Association of Realtors, home sales significantly dropped 5.1 % to an annual rate of 4.62 million units last month which cumulated to an eighteen-month low. The data further added to a recent weak U.S. economic data on homebuilder confidence and retail sales.
In other events, the euro was able to hit a high of $1.3759 against the dollar and was last trading up to 0.08 % at a rate of $1.3725, putting the dollar back on track to score its third weekly loss respectively.
The frail existing home sales data was a negative sign for the U.S. dollar which assisted the euro as evidenced by the dollar declining 0.2 % as against the Swiss franc at 0.8877.
The dollar had very little changes as against a basket of major currencies, however at 80.307 the dollar index was somehow able to regain some of its lost footing following a trough of 79.927 last week which was by far its lowest level since late December of last year.
Albeit the most recent weak U.S. economic data, traders have been given reassurance after the release of last week’s minutes from the Federal Reserve’s January 28-29 policy meeting wherein the Fed’s asset reduction plan will remain variably intact.
According to the minutes of the said meeting, several policy makers wanted to accentuate that their asset purchase programme would be cutback in a predictable $10 billion steps unless the economy’s performance surprised them.
There have been several expectations that the Fed might probably not taper at the same pacing as it did before which weighed heavily on the dollar. But it appears that judging from what the economy is throwing at the market, the data needs to depreciate very sharply in order for the Fed to remain stable, hence the possibility of a dollar recovery.
As compared to the yen, the dollar was able to edge up 0.4 % to 102.66 yen which moved past from last week’s intraday low of 101.67 yen. It was able to hit its peak of 102.82 yen which was its strongest level since last January. A leap in the Nikkei index weighed on the safe-haven yen which provided the dollar an additional boost.
Generally, traders are constantly on watch for any developments from this weekend’s Group of 20 meeting of finance ministers along with central bank chiefs in Sydney, where global expansion and recent upheaval in emerging markets are anticipated to be the primary focus of such meeting.
Emerging market officials are lobbying for a discussion regarding the impact of the Fed’s stimulus withdrawal on their economies, but the Fed’s focus is likely to remain on U.S. economic conditions instead of other implications of tapering on emerging markets.
Highlighting the continued selloff in emerging markets last week, the Chinese Yuan declined to its lowest level since mid-October last year against the dollar on the offshore market.
Finally, data came in below expectations in Sweden, wherein both manufacturing and consumer confidence fell which resulted on more weigh on the Swedish crown. Moreover, the euro rose 0.4 % to 9.0102 crowns which was its highest level in more than two months.