The greenback traded lower across the board, relinquishing the 1.30-foothold against the euro and sliding past the 0.90-level versus the Australian dollar. Global risk-appetite continues to improve on the heels of Friday's European bank stress test - which revealed 7 banks failing the test. The US equity bourses edged up higher at the start of the week with the S&P 500 closing above its 200-day moving average and recouping from losses earlier in the year to trade flat year-to-date, meanwhile the Dow Jones has also recovered losses to trade higher by nearly 1% year-to-date. Crude oil holds steady just shy of the $79-level while spot gold drifted lower to the $1182 mark.
Markets responded positively to a larger than expected surge in new home sales for June, soaring by 23.6% to 330k units following the record drop of 32.7% from May. The calendar for tomorrow will feature several key indicators, including the S&P / Case-Shiller home price index, the July Richmond Fed manufacturing index and the July Conference Board's consumer confidence survey. Traders are looking for a mixed reading in the Case-Shiller home price index, softer on a monthly basis at 0.15% from 0.44% while marginally higher at 3.9% on a yearly basis from 3.81%. The July Richmond Fed manufacturing is forecast to print weaker at 11 from 23 while the Conference Board's consumer confidence survey is seen lower to 51.0 from 52.9 a month prior.
It remains to be seen whether the rebound in housing will be sustainable, particularly given the weakness in last week's existing home sales and housing starts figures. The data have pointed toward a sharp decline in activity following the expiration of the government's tax credit earlier this year and will likely have ripple effects throughout the rest of the economy. Later in the week, markets will closely scrutinize manufacturing ISM, durable goods orders, Chicago PMI and the Q2 GDP figures.
Euro Touches 1.30
The euro topped the psychologically-key 1.30-mark at the start of the week amid improving global risk appetite. Additionally, traders had feared the worst in the bank stress test results and upon a better than anticipated release, markets propped up the single currency. In the coming session, the economic calendar consists of Eurozone M3 money supply and Germany's import price index.
Resistance is eyed at 1.3040, followed by 1.3070 and 1.31. Subsequent ceilings are eyed at 1.3130, backed by 1.3165 and 1.32. On the downside, support starts at 1.2970, followed by 1.2940 and 1.29.