Dollar Drop Steadies after Housing, Labor Data; EURUSD Holds Highs
THE TAKEAWAY: USD Initial Jobless Claims (MAY 18) > 340K versus 345K expected, from 363K (revised higher from 360K) > House Price Index (MAR) > +1.3% versus +0.8% expected, from +0.9% (revised higher from +0.7%) (m/m) > New Home Sales (MAR) > 454K (+2.3% m/m) versus 425K (+1.9% m/m) expected, from 444K (+1.5% m/m) (revised higher from 417K (+3.5% m/m)) > USDOLLAR NEUTRAL
The Thursday economic docket is usually saturated with several secondary and tertiary US data releases, and if there was ever a day that the US Dollar needed a strong showing, it was today. After yesterday’s Fed events as well as the turmoil in Japanese bond and equity markets, the US Dollar, most poignantly represented by the USDJPY, had been sliding all morning. While pressure remains on the greenback, the housing and labor data released this morning have put its slide in neutral – at least for now.
Of the events released, the most attention was draw to the Initial Jobless Claims (MAY 18) and the New Home Sales (MAR) reports, as the most up-to-date barometers of the US economy. On the labor market side, initial claims improved, while continuing claims dropped to their lowest level in five years; both of these suggest that the US economy is moving back towards above trend labor market growth, likely near +170K in May. On the housing side, median home prices rose to their highest nominal level ever, and the new home sales three month average is holding near its highest rate since October 2008, at 442K.
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the releases, by 10:30 EST/14:30 GMT, the USDOLLAR was holding near its lows of the day of 10783, at 10792. The components of the index were divergent, that is, the USDJPY rallied on the news holding near ¥101.70/80, while the EURUSD remained at its daily highs of $1.2910/20 despite the stronger US data.
--- Written by Christopher Vecchio, Currency Analyst
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