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Dollar bounces up to 7-month highs as markets digest Draghi, U.S. data

Published 10/20/2016, 10:50 AM
© Reuters.  Dollar moves back higher after U.S. data, Draghi remarks
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Investing.com - The dollar bounced back to a fresh seven-month high against the other majors currencies on Thursday, after slipping briefly, as markets digested comments by European Central Bank President Mario Draghi, as well as a string of mixed U.S. data.

The U.S. National Association of Realtors reported on Thursday that existing home sales increased by 3.2% in September to 5.47 million units from 5.30 million in August. The consensus forecast was for a 0.4% advance to 5.35 million units.

The data came after the U.S. Department of Labor said initial jobless claims increased by 13,000 in the week ending October 15 to 260,000 from the previous week’s total of 247,000. Analysts had expected jobless claims to rise by 4,000 to 250,000 last week.

In addition, the Philadelphia Federal Reserve said its business conditions index came in at 9.7 this month, down from 12.8 in September. Economists had expected a reading of 5.3 this month.

EUR/USD was down 0.47% at a four-month low of 1.0922 after the ECB left interest rates unchanged at record lows of zero and held its quantitative easing program unchanged at €80 billion per month.

In a subsequent press conference, ECB President Mario Draghi said the central bank would wait for updated economic forecasts in December to make a decision and that it had not discussed either tapering the size of its asset purchase program or extending the horizon of the purchases.

GBP/USD dropped 0.46% to 1.2233. The U.K. Office for National Statistics earlier said that retail sales were flat in September, after a 0.2% decline the previous month and compared to expectations for a 0.4% rise.

Year-on-year, retail sales increased 4.1% last month, disappointing expectations for a 4.8% rise.

Core retail sales, which exclude automobile sales and fuel, were als flat in September, confounding expectations for an increase of 0.4%.

USD/JPY gained 0.46% to 103.93, while USD/CHF rose 0.34% to 0.9922.

The Australian and New Zealand dollars extended earlier losses, with AUD/USD down 1.19% at 0.7630 and with NZD/USD retreating 0.62% to 0.7186.

Earlier Thursday, the Australian Bureau of Statistics said the number of employed people declined by 9,800 in September, disappointing expectations for an increase of 15,000.

Australia’s unemployment rate remained unchanged at 5.6% last month, compared to expectations for an uptick to 5.7%.

Meanwhile, USD/CAD climbed 0.76% to trade at 1.3213, well off Wednesday’s one-month trough of 1.3001.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.45% at a fresh seven-month high of 98.32.

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