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Forex - Dollar falls as U.S. new homes sales plummet in July

ForexAug 23, 2013 03:22PM ET
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This article has already been saved in your Saved Items - The dollar traded largely lower against most major currencies on Friday after official data revealed new home sales tanked in July and kept expectations alive that the Federal Reserve will continue stimulating the economy with dollar-weakening asset purchases for longer than once anticipated.
In U.S. trading on Friday, EUR/USD was up 0.18% at 1.3380.

The Commerce Department reported earlier that new home sales in the U.S. dropped 13.4% to 394,000 units in July, far worse than market expectations for a 1.4% decline.

In June, new home sales rose 3.6% to 455,000 units.

The numbers kept expectations going that while the Federal Reserve remains ready to begin scaling back the pace of its USD85 billion in monthly asset purchases this year, a start date may come later rather than sooner.

Stimulus tools such as monthly bond purchases drive down interest rates to spur recovery, weakening the dollar in the process.

Fed officials have said they will pay close attention to economic indicators before deciding when to taper stimulus programs.

On Thursday, the Department of Labor reported the number of people filing for initial jobless claims last week rose by 13,000 to 336,000, a little higher than forecasts for 330,000, which helped soften the dollar in quiet trading.

Meanwhile in Europe, Germany's gross domestic product grew 0.7% in the second quarter from the first, in line with market expectations.

The greenback was up against the pound, with GBP/USD down 0.09% at 1.5575.

Official data revealed that the U.K. gross domestic product grew by 0.7% in the second quarter from the first, beating expectations for a 0.6% expansion.

The U.K. Office for National Statistics said in a preliminary report earlier that business investment rose 0.9% in the second quarter, surpassing expectations for a 0.6% increase after a 1.9% contraction in the first quarter.

Still, profit taking sent the pound falling.

The dollar was down against the yen, with USD/JPY down 0.04% at 98.69, and down against the Swiss franc, with USD/CHF trading down 0.14% at 0.9220.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.10% at 1.0508, AUD/USD up 0.26% at 0.9030 and NZD/USD trading down 0.20% at 0.7814.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.11% at 81.41.

Forex - Dollar falls as U.S. new homes sales plummet in July

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