U.S. Economic Numbers Help Lift Greenback

The US dollar recovered much of the previous session´s losses yesterday as a raft of economic data pointed to the continuing health of the US economy.

In particular, dollar bulls were cheered by data on new homes sales, which undid much of the gloom surrounding Monday´s soft existing homes sales numbers.

New homes sales rose to a record 1.424m in October, far in excess of the 1.2m expected. Even if some of the excess may represent post-hurricane buying, the data certainly helped calm fears that the US housing market was slowing down.

“The data contrast with expectations that the housing market is beginning the process of slowing,” said Mitul Kotecha, global head of Foreign Exchange Strategy at Canyon. “The strength of new homes sales is impressive considering the rise in mortgage rates.”

Treasury and Fed funds futures prices fell as the market expressed renewed confidence that the Federal Reserve still has a few more rate rises up its sleeve, aiding the dollar in the process.

Durable goods orders also beat expectations, although a 3.4 per cent jump in the headline reading in October was distorted by a surge in aircraft orders as a strike at Boeing ended. Core orders actually undershot expectations, but the market seemed to conclude that an upward revision to September´s reading more than compensated.