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Forex News: Dollar Rising Despite Disappointing New Home Sales

Dollar Rising Despite Disappointing New Home Sales

05/23/2017 - 14:37:00 (RTTNews)

(RTTNews) - The dollar is trading modestly higher against all its major rivals Tuesday afternoon. However, investors remain in a cautious mood following the terror attack in Manchester, England yesterday and the further developments that have come to light regarding the Trump administration.

The latest controversy emerged from a media report that the U.S. President has requested two top intelligence officials in March to help him push back against the FBI's probe into possible collusion between the Trump campaign and Russian government.

The Washington Post reported Monday that Trump pressed National Security Agency chief Michael Rogers and Director of National Intelligence Dan Coats to dismiss any evidence of collusion in the 2016 Presidential election.

Traders are looking forward to the release of the Fed minutes on Wednesday for further hints about a rate hike in June. Other key economic data include existing home sales on Wednesday, weekly jobless claims and international trade on Thursday, followed by GDP, durable goods orders and consumer sentiment on Friday.

After reporting an unexpected jump in U.S. new home sales in the previous month, the Commerce Department released a report on Tuesday showing a substantial pullback in new home sales in the month of April.

The Commerce Department said new home sales plunged by 11.4 percent to an annual rate of 569,000 in April from an upwardly revised 642,000 in March.

Economists had expected new home sales to drop to a rate of 602,000 from the 621,000 originally reported for the previous month.

Eurozone finance ministers hope to reach a deal on Greece's debt relief and release another tranche of bailout funds to the country in their June meeting, as they failed to reach an agreement on the matter with the International Monetary Fund on Monday.

Greek lawmakers approved a reforms package last Thursday that includes pension cuts and tax hikes as demanded by the country's creditors to pave the way for the disbursement of bailout funds totaling more than EUR 7 billion and to begin talks on debt relief.

Discussions over providing more bailout funds had stalled after a review mission to Athens returned in December without reaching a deal. The country is in dire need of bailout cash to meet debt repayment of more than EUR 7 billion due in July, or risk default.

The dollar dipped to an early low of $1.1267 against the Euro Tuesday, but has since climbed to around $1.1190.

Eurozone private sector growth continued in May, logging the fastest growth for six years in May, flash data from IHS Markit showed Tuesday. The flash composite output index came in at 56.8 in May, unchanged from April's six-year high. The score was forecast to fall slightly to 56.7.

Germany's private sector expanded at the sharpest rate in over six years in May, flash survey results from IHS Markit showed Tuesday. The composite output index rose unexpectedly to a 73-month high of 57.3 in May from 56.7 in April. The expected reading was 56.6.

The French private sector grew at the sharpest pace in six years in May, flash survey data from IHS Markit showed Tuesday. The composite output index rose to a 72-month high of 57.6 in May from 56.6 in April. Economists had forecast the score to remain unchanged at 56.6.

A record high business sentiment, a one-year high economic growth and a six-year high growth in the private sector signal strong positive momentum of the German economy, the biggest in the euro area.

As companies were upbeat about their future amid the improving current situation, the business sentiment index strengthened to a record high 114.6 from a revised 113.0 in April, the Munich-based Ifo institute reported Tuesday.

Ifo business confidence score reached its highest level on record since 1991. The reading was expected to rise marginally to 113.1 from April's initial estimate of 112.9.

Germany's economy expanded at a faster pace, as estimated in the first quarter, on domestic and foreign demand, data published by Destatis showed Tuesday.

Gross domestic product grew 0.6 percent sequentially, in line with preliminary estimate and faster than the 0.4 percent expansion seen in the fourth quarter.

This was the fastest growth since the first quarter of 2016, when GDP climbed 0.7 percent.

The buck briefly fell to a low of $1.3032 against the pound sterling Tuesday, but has since bounced back to around $1.2975.

The UK budget deficit increased in April, data from the Office for National Statistics showed Tuesday.

Public sector net borrowing excluding public sector banks increased by GBP 1.2 billion from previous year to GBP 10.4 billion in April, this was the highest April borrowing since 2014.

The expected level of PSNB was GBP 8.8 billion.

The greenback slipped to an early low of Y110.903 against the Japanese Yen Tuesday, but has since risen to around Y111.590.

Japan's manufacturing activity expanded at the weakest pace in six months in May, preliminary data from IHS Markit showed Tuesday. The Nikkei Flash Manufacturing Purchasing Managers' Index, or PMI dropped to 52.0 in May from 52.7 in April. However, any reading above 50 indicates expansion in the sector.

Japan's all industry activity declined at a faster-than-expected rate in March, after rebounding in the previous month, figures from the Ministry of Economy, Trade and Industry showed Tuesday. The all industry activity index fell 0.6 percent month-over-month in March, reversing a 0.7 percent rise in February. Economists had expected a 0.5 percent decrease for the month.

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