Dollar Rising Against Euro After Drop In Eurozone Inflation

The dollar is gaining ground against the Euro Monday afternoon, but is down in comparison to the Japanese Yen and the British pound. Economic data is in focus at the start of the new trading week. A pair of weaker than expected U.S. economic reports is weighing on the buck, while Eurozone inflation data unexpectedly declined.

Chicago-area business activity unexpectedly contracted in the month of February, according to a report released by MNI Indicators on Monday.

MNI Indicators said its Chicago business barometer tumbled to 47.6 in February from 55.6 in January, with a reading below 50 indicating a contraction in business activity. Economists had expected the index to drop to 53.0.

Pending home sales in the U.S. unexpectedly saw a notable decrease in the month of January, the National Association of Realtors revealed in a report on Monday. NAR said its pending home sales index slumped 2.5 percent to 106.0 in January from an upwardly revised 108.7 in December.

The decrease came as a surprise to economists, who had expected pending home sales to increase by about 0.5 percent.

The dollar has risen to around $1.0885 against the Euro this afternoon, its highest level in a month, from an early low of $1.0962.

Eurozone consumer prices declined for the first time in five months in February and at the fastest pace in a year, adding to the deflation worries of the European Central Bank, which is widely expected to announce another round of stimulus next week.

The flash harmonized index of consumer prices fell 0.2 percent year-on-year following a 0.3 percent rise in January, Eurostat said Monday. That defied economists’ expectations for a 0.1 percent gain.

Germany’s retails sales increased at a faster-than-expected pace at the start of the year, preliminary figures from Destatis showed Monday.

Retail sales rose a seasonally and calendar-adjusted 0.7 percent month-over-month in January, exceeding economists’ expectations for a 0.3 percent climb. It was also slightly faster than the 0.6 percent gain December.

The buck has pulled back to around $1.3915 against the pound sterling Monday afternoon, from a high of $1.3834 this morning.

U.K. mortgage approvals increased to a 2-year high in January, the Bank of England reported Monday. The number of mortgages approved in January rose to 74,581, the biggest since January 2014, from 71,335 in December.

The greenback has retreated to around Y112.790 against the Japanese Yen this afternoon, from an early high of Y113.854.

Industrial production in Japan climbed a seasonally adjusted 3.7 percent on month in January, the Ministry of Economy, Trade and Industry said in Monday’s preliminary reading, rising for the first time in three months.

The headline figure beat forecasts for an increase of 3.2 percent following the 1.7 percent decline in December.

Japan’s housing starts increased unexpectedly at the beginning of the year, after falling in the previous month, data from the Ministry of Land, Infrastructure, Transport and Tourism showed Monday. Housing starts rose 0.2 percent year-over-year in January, confounding economists’ expectations for a 0.3 percent drop. In December, it had fallen 1.3 percent.

The material has been provided by InstaForex Company – www.instaforex.com