The U.S. dollar was firmer against its major rivals in European trading on Monday, as last week’s positive U.S. gross domestic data rekindled expectations for further rate hikes by the Federal Reserve this year.
The Commerce Department on Friday reported that the second estimate of US GDP was revised up to 1 percent for the fourth quarter, from an initial 0.7 percent, surprising analysts who had expected a 0.4 percent growth.
Separate reports showed that U.S. personal income and spending rose more than expected in January, bolstering the outlook for U.S. economy.
Traders now focus on manufacturing and services PMI reports, ADP private sector payrolls data and nonfarm payrolls report – all for February, due this week, for more insights about the economic growth.
The Fed said that it would analyze incoming economic data for signs regarding whether the economy can withstand another interest-rate increase after raising rates for the first time in nearly a decade in December.
European shares fell despite encouraging German retail sales and U.K. mortgage approvals data as well as news that China’s central bank will cut the reserve-requirement ratio for all banks by 0.5 percentage point.
The dollar was lower in Asian deals, as the G20 meeting failed to come up with coordinates measures to stimulate sagging global economic growth.
In European deals, the greenback firmed to 1.0038 against the franc for the first time since February 4. The greenback may challenge resistance around the 1.01 mark.
Survey data from the Swiss Economic Institute showed that a forward-looking indicator of the health of the Swiss economy climbed for a second straight month in February to its highest level in nine months, signaling that the prospects are brightening.
The Swiss KOF Economic Barometer rose to 102.4, its highest level since May last year. The January score was revised to 100.4 from 100.3.
Reversing from a low of 1.3915 hit at 2:45 am ET, the greenback climbed to a 7-year high of 1.3835 against the pound. On the upside, 1.37 is likely seen as the next resistance level for the greenback.
Data from the Bank of England showed that U.K. mortgage approvals increased to a 2-year high in January.
The number of mortgages approved in January rose to 74,581, the biggest since January 2014, from 71,335 in December.
The greenback spiked up to near a 4-week high of 1.0879 against the euro, following a decline to 1.0963 at 3:00 am ET. If the greenback extends rise, it may locate resistance surrounding the 1.07 region.
Preliminary data from the statistical office Eurostat showed that the flash harmonized index of consumer prices fell 0.2 percent year-on-year following a 0.3 percent rise in January. Economists had expected a 0.1 percent gain.
The latest decline was the biggest since February last year, when prices fell 0.3 percent.
The greenback strengthened to a 4-day high of 1.3587 against the loonie, and held steady thereafter. The greenback is poised to locate resistance around the 1.38 level.
On the flip side, the greenback remained lower against the yen with the pair trading at 113.08, off its prior high of 113.98. The pair was worth 113.96 when it ended Friday’s trading.
Japan’s housing starts increased unexpectedly at the beginning of the year, after falling in the previous month, according to a data from the Ministry of Land, Infrastructure, Transport and Tourism.
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
Looking ahead, U.S. Chicago PMI for February and U.S. pending home sales data for January are set to be released shortly.
The material has been provided by InstaForex Company – www.instaforex.com