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Dollar continues to wobble on weaker housing, factory data

6/1/2017, 9:36:17 AMBasics of Trading
Dollar continues to wobble on weaker housing, factory data

The dollar drifted lower against a basket of major currencies on Wednesday after a pair of economic reports showed weakness in both the U.S. manufacturing and housing sector.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.33% to 96.90 by 13:03 EDT.

The dollar dropped to session lows, after U.S. Midwest manufacturing fell more than forecast in May from its strongest level in more than two years while continued tightening in the number of homes available for sale weighed on U.S. pending home sales.

The Chicago Purchasing Management Index, also known as the Chicago Business Barometer, fell to 55.2 from April's 58.3 which was the highest level since January 2015. Analysts had expected a reading of 57.0 for May.

In a separate report, The National Association of Realtors said U.S. pending home sales, a forward looking measure of US home sales, fell 1.3% in April.

It was the second consecutive month of soft pending home sales data, and missed analysts’ forecasts of a rise to 0.5%.

"Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market," said Lawrence Yun, chief economist for the Realtors

GBP/USD recovered from session lows to $1.2888, up 0.23%, after research company Panelbase said Prime Minister Theresa May’s lead over the Labour Party increased to 15 points, easing concerns over an earlier YouGov poll that showed Conservatives failing to secure an overall majority in the June 8 vote.

EUR/USD rose 0.44% to $1.1235 while EUR/GBP tacked on 0.18% to 0.8716, following the release of a raft of mixed economic reports, which included an unexpected dip in German retail sales and jobs data.

USD/JPY dipped to Y110.66, down 0.15%, while USD/CAD rose by 0.41% to $1.3514.

The oil-linked Canadian dollar, has come under pressure in recent sessions amid a slump in oil prices as oversupply jitters continue to mount despite Opec and its allies’ agreement to extend production cuts for nine additional months to March 2018, last week.