RTTNews - The dollar came under heavy pressure Tuesday in New York, plunging to a 5-month low against the sterling as optimism about a global economic recovery generated further risk appetite.
Encouraging housing data and stock gains weighed on the dollar yesterday, and today's release on new home construction could go a long way in determining the performance of the buck.
The embattled housing market may have bottomed out this spring, after a brutal stretch that sparked the near-collapse of the financial system.
On Monday, the National Association of Home Builders said its index of homebuilder sentiment rose to 16 in May, compared to a level of 14 in April. The figure was the best reading since September, fueling speculation that the housing sector is bottoming and economic recovery may be around the corner.
Tuesday will see the release of more data about the housing market in the US, with the government scheduled to release statistics on new home building activity.
New home construction is expected to have risen to a seasonally adjusted annual rate of 520,000 in April, from March's 510,000 units, according to Wall Street economists surveyed by Thomson Reuters.
The dollar plummeted to depths not seen in 2009 versus the sterling Tuesday morning, falling to 1.5515. With the loss, the dollar extended a long-term downtrend, moving a full 20 cents from its 23-year high of 1.3501, set in January.
The Office for National Statistics said in a report that UK consumer price annual inflation eased to 2.3% in April from 2.9% in the previous month. Economists had expected the annual rate to slow to 2.4%. On a monthly basis, consumer prices climbed 0.2%, slower than the expected rise of 0.4%.
The dollar also eased versus the euro, but to a lesser degree. Extending its losses from the previous session, the buck slipped to 1.3625. While the dollar has seen sever losses against the sterling and resource-linked currencies of late, the dollar has managed to stay within a relatively narrow trading range against the euro.
The Mannheim-based Centre for European Economic Research, or ZEW, said its economic sentiment indicator for Germany rose to 31.1 in May from 13 in April, while the forecast was for an increase to 20.
The dollar is at the lower end of a 2-month range between 1.2900 and 1.3800, but supported by concerns that the euro area will lag behind the rest of the world in joining any economic recover.
Meanwhile, the buck bounced back and forth versus the yen Tuesday morning, unable to add to yesterday's advance. The buck leveled off near 96, staying near a 2-month low of 94.54, set earlier in the week.
For comments and feedback: contact email@example.com