The greenback kicked off the holiday-shortened week higher against the majors, edging up to 104.32 versus the yen and 1.5703 against the euro on the heels of mixed US economic reports earlier in the session. New home sales in April reversed an 8.5% decline in March, improving by 3.3% to 526k units. However, the Case Shiller home price index in March posted its steepest decline on record, down by 14.4% versus a 12.7% drop in February. Meanwhile, in another sign of the struggling US economy Â¨C the Conference BoardÂ¡Â¯s May Consumer Confidence survey dropped to a two-year low and worst than expectations to 57.2 versus April at 62.3.
Economic reports slated for release on Wednesday will see April durable goods orders. Also due out this week will be Q1 core PCE, GDP, weekly jobless claims, April personal income, consumption and the May University of Michigan sentiment survey.
San Francisco Fed President Janet Yellen said that monetary policy was reasonably positioned now, saying the Fed will have to be attentive to reversing the rate cuts. Yellen discounted further incoming weak economic data suggesting it would not automatically signal additional rate cuts. She expects the housing market to bottom some time in 2009 and sees consumer spending holding up better than feared. Yellen also suggested the Fed will likely remain unchanged for some time, saying the Fed will eventually need to raise rates at some point, which is still down the road.