US Dollar Drops as Fundamentals Signal About Economic Recovery

The US dollar fell today as the unexpected increase of the US pending home sales in October and the rally of the stocks and the commodities signaled about the economic recovery and damped the demand for the dollar as the safe haven.

The US pending home sales grew 10.4 percent in October, following the decline by 1.8 percent in September. The result was much better than the forecast reading of the 0.7 percent drop. The demand shifted from the safe currencies to the riskier ones also as the report yesterday showed that the US employers added 93,000 jobs in November.

The Standard & Poor’s 500 Index jumped as much as 1.2 percent. The 
Reuters-Jefferies CRB Index of raw materials posted the second day of gains, rising 1 percent. The Dollar Index, tracking the greenback versus the six major currencies of the US trading partners, declined for the second day, falling 0.6 percent to 80.211.

EUR/USD advanced from 1.3136 to 1.3219 as of 21:40 GMT after it fell as low as 1.3060. USD/JPY dropped from 84.18 to 83.86, following the decline to the intraday low of 83.48.

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