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U.S. durable goods orders drop in January, weighs on dollar
U.S. pending home sales rise; dollar sell-off persists
Sterling, euro up sharply
The dollar tumbled from a seven-week high on Monday, tracking declines in U.S. Treasury yields, as investors took advantage of the greenback's recent rise to consolidate gains, taking stock of last week's strong U.S. economic data and the outlook for global interest rates.
The U.S. currency's decline was also exacerbated by a higher-than-expected decline in U.S. durable goods of 4.5% last month, reversing a huge December boost from Boeing. These so-called durable goods orders increased 5.1% in December.
The report dented some of hawkishness built into U.S. rates, analysts said. U.S. interest rates though are expected to remain higher for longer.
"The dollar had a good run. Part of that has been (the fact that) U.S. data has surprised to the upside and we have seen rates rise pretty much everywhere," said Erik Nelson, macro strategist at Wells Fargo Securities in London, noting that the greenback was due for a pullback after recent strong gains.
Data showing U.S. pending home sales posting their largest gain in 2-1/2 years failed to lift the dollar, however.
The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on signed contracts, jumped 8.1% last month, the biggest increase since June 2020. Economists polled by Reuters had forecast contracts, which become sales after a month or two, rising 1.0%.
Data on Friday showed U.S. consumer spending rebounded sharply in January, while inflation accelerated. Traders now expect the Fed to raise interest rates to around 5.4% by the September meeting, according to pricing in rate futures markets FEDWATCH . At the beginning of February, they envisaged rates rising to a peak of just 4.9%.
The U.S. dollar index =USD , which measures the greenback against six major peers, has risen almost 3% in February and is on track to snap a four-month losing streak.
The index, however, was last down 0.6% at 104.60, after earlier climbing to its highest since Jan. 6. The euro EUR=EBS fell to its lowest against the dollar since Jan. 6 on Monday, but later rebounded to trade 0.6% higher at $1.0612 .
The dollar fell 0.3% against the Japanese yen JPY=EBS to 136.12 yen, reversing some of its gains after rising to a more than two-month high of 136.54 earlier in the session.
JAPANESE ECONOMY Incoming Bank of Japan Governor Kazuo Ueda said on Monday the merits of the bank's current monetary policy outweigh the costs, stressing the need to maintain support for the Japanese economy with ultra-low interest rates.
The pound GBP=D3 was up 0.9% at $1.2041, after falling for three straight sessions. Analysts said a potential deal resolving post-Brexit tensions with the European Union was supporting the pound.
Ulrich Leuchtmann, head of FX research at Commerzbank, said overall core inflation was a key concern for central bankers.
"Whereas headline rates are falling, the trend of rising core inflation rates has been unbroken," he said.
Friday's data showed the core measure of U.S. personal consumption expenditures inflation, which strips out volatile food and energy costs, came in at 4.7% year-on-year in January, up from 4.6% in December.
Core consumer price inflation in the euro zone rose to a record high of 5.3% year-on-year in January. Investors will get more information on the state of the global economy this week, with U.S. ISM manufacturing and services survey data for February due on Wednesday and Friday respectively; and preliminary euro zone CPI inflation figures for February due on Thursday.
======================================================== Currency bid prices at 10:44AM (1544 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 104.7200 105.1800 -0.43% 1.189% +105.3600 +104.5400 Euro/Dollar EUR=EBS $1.0602 $1.0545 +0.52% -1.08% +$1.0620 +$1.0533 Dollar/Yen JPY=EBS 136.1700 136.5250 -0.25% +3.87% +136.5400 +135.9100 Euro/Yen EURJPY= 144.35 143.93 +0.29% +2.89% +144.4500 +143.5800 Dollar/Swiss CHF=EBS 0.9363 0.9411 -0.51% +1.26% +0.9428 +0.9347 Sterling/Dollar GBP=D3 $1.2030 $1.1940 +0.75% -0.54% +$1.2056 +$1.1923 Dollar/Canadian CAD=D3 1.3554 1.3608 -0.38% +0.05% +1.3680 +1.3534 Aussie/Dollar AUD=D3 $0.6725 $0.6726 -0.01% -1.34% +$0.6743 +$0.6699 Euro/Swiss EURCHF= 0.9925 0.9922 +0.03% +0.30% +0.9946 +0.9913 Euro/Sterling EURGBP= 0.8810 0.8828 -0.20% -0.38% +0.8835 +0.8799 NZ NZD=D3 $0.6164 $0.6164 +0.00% -2.92% +$0.6180 +$0.6132 Dollar/DollarDollar/Norway NOK=D3 10.3410 10.3890 -0.06% +5.80% +10.4270 +10.3700 Euro/Norway EURNOK= 10.9674 10.9527 +0.13% +4.51% +10.9970 +10.9309 Dollar/Sweden SEK= 10.4165 10.4965 -0.25% +0.08% +10.5171 +10.3890 Euro/Sweden EURSEK= 11.0448 11.0725 -0.25% -0.98% +11.0870 +11.0266 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5ECurrencies vs. dollar https://tmsnrt.rs/3ZsO1NH US PCE price index https://tmsnrt.rs/41sbSij
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