Friday, 21 Aug 2009

Strong U.S Housing Data Boosts Optimism

The EUR has rallied to a two-week high of $1.4377 against the Dollar today following a better than expected U.S housing data release. Existing home sales rose to their highest level in nearly two years in July, boosted by cheaper prices. However as Crude Oil futures slipped from their highest intraday levels the Dollar was able to regain some of its losses, although it is still down on the day.

Putting further pressure on the Dollar, Federal Reserve Chairman Ben Bernanke's testimony on the U.S.'s recovery prospects was rather optimistic. He also stated that the global economy is emerging from recession which further reduced demand for safety. For the week, the Dollar dropped 0.9% versus the EUR and 0.5% against the Yen; however it was able to maintain today's gains versus the Japanese currency.

The strong U.S Homes Sales report has also sparked rallies in equities and Oil prices, both reaching new peaks for 2009. Futures on Crude Oil rose 92 cents to $73.83 a barrel in New York, hitting an intraday high of $74.72. The string of optimistic economic data will carry through next week as well and so will the bearish sentiment on the USD.