RTTNews - The dollar remained under heavy pressure versus the sterling and loonie Wednesday morning in New York, extending its multi-month lows ahead of the release of key housing data.
Trading on Wednesday is likely to be impacted by the release of housing data from the National Association of Realtors. The trade group will release their report on existing home sales in April at 10 am ET, with sales expected to tick up to a 4.66 million annual rate.
Most analysts agree that the foundation of any sustained economic recovery must be a stable housing market. Following a brutal stretch that sparked the credit crisis and eventually a sever global recession, the housing market had shown some signs of bottoming, but yesterday a report indicated home prices in the US dropped during the first quarter at the fastest pace on record.
However, the Conference Board's reading on consumer confidence for May improved by far more than expected, reaching its highest level since September. The data generated some optimism about the outlook for consumer spending, which accounts for nearly two-thirds of economic activity.
The dollar continued to move lower versus the resurgent sterling Wednesday morning, dropping to a 6-month low of 1.6038. A 23-year high of 1.3501 from earlier in the year seems a distant memory.
The number of mortgages approved in the U.K. rose to 27,685 in April from 26,671 in March, the British Bankers' Association said Wednesday. However, approvals for April stood below the expected level of 28,000 and dropped 15.5% from the previous year.
The dollar dropped to a new 7-1/2 month low of 1.1106 versus the petro-linked loonie. The Canadian currency, which is closely tied to commodity prices, has been bolstered by crude oil's rise aboev $63 a barrel.
Meanwhile, the dollar was able to hold its ground versus the euro amid speculation that the euro zone economy may stagnate. The dollar held near 1.3900, more than a penny from last week's 4-month low of 1.4050.
Against the yen, the dollar firmed up very slightly, improving to 95.40 from last week's 2-month low of 93.84. While both the dollar and yen have seen similar interest this year as safe havens, the yen has been favored of late amid concerns that the US may lose its AAA rating.
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