US Dollar Falls Ahead of Critical Fed Rate Decision - Further Declines Likely?

US Pending Home Sales provided an unexpected glimmer of hope for the domestic housing market, posting a second consecutive monthly gain through October. Seasonally-adjusted sales gained 0.6 percent through the period—far better than consensus forecasts for a 1.0 percent pullback. Yet such gains were far from uniform; the Northeast region registered a sizeable 11.1 percent improvement, but the Southern states saw a disappointing -7.7 percent change. The net result left year-over-year sales at a -17.4 percent nationally and a particularly pronounced -24.4 for the South. Traders nonetheless welcomed the improvement and sent the US dollar marginally higher following the Pending Home Sales result.

Similar improvements in domestic equity indices left the Dow Jones Industrial Average at fresh monthly highs of 13,754 through morning trade, but a later pullback left the key stock market barometer at +75 points to 13,700. The S&P 500 saw a similar percentage gain at +8 points to 1,512.50, while the NASDAQ Composite was the smallest percentage mover at +0.3 percent to 2,714. 

Markets sent US Treasury Yields cautiously higher on the housing report, with the 2-year Note yield bouncing 4 basis points to weekly highs of 3.14 percent. Identical improvements in the 10-year yield left it at monthly highs of 4.15, while the long-dated 30-year traded 4bp higher to 4.61 percent.

Written by David Rodríguez, Currency Analyst for DailyFX.com 

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