Monday, 28 Dec 2009 The Dollar continued to climb against most of the major currencies during last week's trading session, except for the Euro. The Dollar strengthened against the Pound and rose over 100 pips against the Yen. However, the Dollar failed to extend its bullish trend vs. the Euro, and the EUR/USD pair even rose a bit towards the 1.44 levels.
The Optimism regarding the U.S. economy, which strengthened the Dollar, especially during the beginning of last week, was due to the positive Existing Home Sales publication. The report showed that 6.54M residential buildings were sold during November, well above expectations for a 6.29M figure. This result led investors to gain confidence that the U.S. economy is indeed recovering. Due to the fact that the cause of the economic crisis was the deterioration of the U.S. housing sector, such a positive result, created a sentiment that a full recovery may take place sooner than expected.
However, the main reason that the Dollar's appreciation was halted, and even followed by a bearish correction vs. the Euro, was another housing sector publication - the New Home Sales. This report measured the number of new single-family homes that were sold during November. While analysts expected a 442,000 figure, the end result was quite disappointing, as merely 355,000 new homes were sold. Naturally, this had the exact opposite effect on the Dollar. The unfortunate figure created pessimism that the U.S. housing sector isn't doing so well after all. The Dollar promptly dropped against the Euro as a result.
As for the week ahead, several interesting publications are expected from the U.S. economy. The data which is likely to impact the most on the market this week is the U.S. Consumer Confidence scheduled for Tuesday. The Consumer Confidence is a survey of about 5,000 households which are asked to rate the level of current and future economic conditions. A positive end result is likely to support the Dollar.