The dollar is up against its major competitors Tuesday, extending its early gains against most. Economic data has provided a boost to the currency, after U.S. consumer confidence improved in August and new home sales rebounded notably in July. In a surprise move, the People’s Bank of China also lowered interest rates for the fifth time in nine months.
After reporting a sharp drop in U.S. new home sales in the previous month, the Commerce Department released a report on Tuesday showing a notable rebound in sales in the month of July. The report said new home sales jumped to an annual rate of 507,000 in July, 5.4 percent above the revised June rate of 481,000.
Economists had expected new home sales to climb to a rate of 516,000 from the 482,000 originally reported for the previous month.
Consumer confidence in the U.S. has seen a substantial improvement in the month of August, according to a report released by the Conference Board on Tuesday, with the consumer confidence index rebounding from the drop seen last month.
The Conference Board said its consumer confidence index jumped to 101.5 in August from 91.0 in July. The index had been expected to show a more modest increase to a reading of 94.0.
Investors can look forward to the release of durable goods orders on Wednesday and GDP is due on Thursday. Readings on personal income & consumer spending are slated for Friday, as well as consumer sentiment.
China’s central bank cut its key interest rates and reserve ratio in a surprise move on Tuesday, boosting efforts to support the slowing economy. The interest rates were reduced by 0.25 percentage points each, the People’s Bank of China said in a statement on its website.
The benchmark one-year lending rate was cut to 4.6 percent and the deposit rate was slashed to 1.75 percent. The new rates are effective from August 26. The ceiling on fixed deposits with tenure more than a year was also scrapped in sync with the deposit rate liberalization plan.
The dollar has climbed to around $1.1425 against the Euro Tuesday, after dropping to a 7-month low of $1.1713 yesterday.
German business confidence improved unexpectedly in August, reports said citing data from the Munich-based Ifo Institute on Tuesday. The Ifo Business Climate Index rose to 108.3 in August from 108 a month ago. It was forecast to fall to 107.6.
Germany’s economic growth improved as initially estimated in the second quarter, driven by strong exports. Gross domestic product rose 0.4 percent quarter-on-quarter, faster than the 0.3 percent expansion seen in the first three months of the year, final data from Destatis showed Tuesday. The growth rate matched the preliminary estimate released on August 14.
The buck has rebounded to around $1.5685 against the pound sterling Tuesday afternoon, from an early 2-month low of $1.5818.
The greenback is trading around Y119.750 this afternoon, after hitting a 7-month low of Y116.127 yesterday.
The material has been provided by InstaForex Company – www.instaforex.com