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Dollar Rides Upbeat U.S. Economic Data Higher

3/6/2019, 3:04:13 PMTrading Strategies
Dollar Rides Upbeat U.S. Economic Data Higher

The dollar edged higher against its rivals Tuesday after data showing a rebound in U.S. housing and services activity allayed investor fears about a slowdown in the economy.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.16% to 96.76.

ISM non-manufacturing data for February showed an uptick to 59.7, beating expectations for reading of 57.3. The services sector is critical component of the U.S. economy, accounting for roughly 80% of U.S. private-sector gross domestic product (GDP).

On the housing front, meanwhile, the Commerce Department said new-home sales rose 3.7% to a seasonally adjusted annual rate of 621,000 units in December. That was above economists’ forecasts for a decline of 8.7% to 600,00 units.

The dollar's advanced was pegged back, however, as Federal Reserve members continued to chime in with dovish remarks, expressing support for a continued wait-and-see approach by the U.S. central bank on interest-rate changes.

Boston Federal Reserve President Eric Rosengren, an FOMC voter and widely viewed as a monetary policy hawk, said it likely will be several meetings before the Fed has a clear view of risks, even as some of the concerns from late last year have faded.

Minneapolis Federal Reserve President Neel Kashkari, meanwhile, said there is a little sign a recession was on the horizon. He did warn, however, that uncertainty surrounding China trade could have big impact on the U.S. economy.

GBP/USD fell just 0.09% to $1.3175, after dipping below $1.31 intraday after Bank of England Governor Mark Carney offered a downbeat assessment of the U.K. economy.

EUR/USD fell 0.24% to $1.1310, shrugging off better-than-expected euro-area services, manufacturing and retail sales data.

USD/CAD rose 0.25% to $1.3333 as the loonie came under pressure on reports China had blocked major Canadian agribusiness Richardson International's registration to ship canola to China.

USD/JPY rose 0.12%, but concerns about slowing growth boosted the safe-haven yen after China predicted growth in 2019 in a range of 6% to 6.5%, below 6.6% seen last year.