Forex - Dollar Shrugs off Upbeat U.S. Housing Data as Stronger Euro Weighs

Dollar shrugs off upbeat U.S. housing data as stronger euro weighs

Investing.com – The dollar came under pressure Monday, shrugging off upbeat U.S. housing data as a stronger euro weighed on sentiment.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.42% to 94.07.

The housing sector, meanwhile, showed a little resilience as the National Association of Realtors’ pending home sales rose 0.9% to 106.9 in June, ending two consecutive months of declines.

"The trend in (pending home) sales is flat, and the mortgage applications numbers point to a modest decline over the next few months, as higher mortgage rates and tighter lending standards bite into demand," Pantheon said in a note to clients Monday.

"The June pending sales index suggests that July existing home sales will rise slightly, to about 5.45 million."

The better-than-expected housing data arrived as investors eagerly await a slew of updates on monetary policy from a trio of central banks this week, including the Federal Reserve on Wednesday.

The Federal Open Market Committee is expected to vote to leave interest rates unchanged on Wednesday, but market participants are expected to closely parse the accompanying statement for any tweaks in language on monetary policy.

"Wednesday's FOMC meeting is going to be a non-event as the Committee is not expected to raise rates or alter the balance sheet normalization schedule next week, though there's a risk of a change in language contained within the statement," BMO said last week.

Elsewhere, a stronger euro and pound held back performance as the latter pair rose on above-forecast UK mortgage data ahead of the widely expected Bank of England interest rate hike due later this week.

GBP/USD rose 0.24% to $1.3138, while EUR/USD rose 0.49% to $1.1715 as Eurozone consumer confidence met expectations.

USD/JPY fell 0.05% to Y110.97 as the Bank of Japan conducted its third operation in a week Monday overnight, buying $14.4 billion in the 5-to 10-year sector, sending yields on Japan 10-Year bond lower, weakening the yen.

USD/CAD fell 0.31% to C$1.3019.