EUR/USD
The euro bounced up from near 22-month lows against the dollar on Monday after mixed U.S. data sent investors selling the greenback for profits. Expectations for U.S. monetary policy to grow less accommodative at a time when Europe may move to loosen have firmed the dollar in recent sessions, though by Monday, mixed U.S. data gave investors room to sell the greenback for profits. The National Association of Realtors reported earlier that its pending home sales index fell 1.0% to 104.7 in August from 105.8 in July. Economists had expected the index to tick down 0.1% last month. Separately, the Commerce Department said that U.S. personal spending rose 0.5% in August, beating expectations for an increase of 0.4%, after a 0.1% dip in July.
GBP/USD
The pound was almost unchanged against the broadly stronger dollar on Monday, trading close to two week lows as investors looked ahead to a series of economic reports later in the week. The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, touched a four year high of 85.93, and was last up 0.06% to 85.83, after notching up its eleventh consecutive weekly gain last week. Demand for the dollar continued to be underpinned after data on Friday showed that the U.S. economy grew at an annual rate of 4.6% in the second quarter, the fastest pace in two-and-a-half years. The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner. The U.K. was to publish reports on manufacturing and service sector growth later in the week. Sterling rallied against the dollar in the first half of the year, rising to six year peaks of 1.7190 in mid-July, boosted by expectations that the robust recovery in the U.K. would see the Bank of England raise interest rates before then end of the year.
USD/JPY
The dollar strengthened against the yen on Monday despite hit-or-miss U.S. data, as investors avoided the Japanese currency ahead of a flurry of economic indicators on both sides of the Pacific. Expectations for U.S. monetary policy to grow less accommodative at a time when Japan may move to loosen have firmed the dollar in recent sessions, though by Monday, mixed U.S. data was seen as strong enough to keep the greenback in positive territory. The National Association of Realtors reported earlier that its pending home sales index fell 1.0% to 104.7 in August from 105.8 in July. Economists had expected the index to tick down 0.1% last month. Separately, the Commerce Department said that U.S. personal spending rose 0.5% in August, beating expectations for an increase of 0.4%, after a 0.1% dip in July.
