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Dollar Edges Lower as Weak Housing Data Weighs

1/23/2019, 11:51:07 AMBasics of Trading
Dollar Edges Lower as Weak Housing Data Weighs

The U.S dollar trickled lowered against its rivals Tuesday as data showed U.S. existing home sales in December fell to their lowest level in more three years.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.09% to 95.91.

The National Association of Realtors showed existing home sales fell 6.4% from November to a seasonally adjusted annual rate of 4.99 million units. Economists were expecting a 2.1% increase to 5.44 million homes.

The U.S. housing market slump has been widely attributed to rising mortgage rates at a time when land and labour shortages are tightening the supply of homes, keeping prices higher.

The pound, meanwhile, extended its gains against the greenback from last week on the back of upbeat U.K. labor market data showing employment hit a record.

GBP/USD rose 0.63% to $1.2971.

EUR/USD rose 0.03% to $1.1368 following weaker business sentiment data from Germany. Analysts remain cautiously optimistic on the single currency on expectations the dollar is set to drift lower.

"We think there is some tactical upside for EUR/USD amid the broad dollar downdraft," Goldman Sachs said. "But we would need to see some stabilization in the data for the euro to outperform on crosses. The flash PMIs on Thursday will be important to determine whether Euro area activity can start to recover from a tough 2018."

The dollar was also pressured by strength in the yen on the back of a rise in safe-haven demand as the International Monetary Fund downgraded its forecast on global growth, a day after data showed Chinese economic growth slowed to its lowest in nearly three decades.

IMF Managing Director Christine Lagarde said the IMF modestly cut its global growth forecast for 2019 to 3.5% from 3.75.

USD/JPY fell 0.38% to Y109.24.

Elsewhere, USD/CAD rose 0.36% to $1.3336 as the loonie came under pressure on falling oil prices.