The US Dollar extended gains against the EUR after a report showed an unexpected fall in U.S. new home sales for September. The data offset solid durables goods numbers and stoked fear the rally in risky assets in recent months has run ahead of fundamentals. As a result, the USD finished yesterday's trading session 100 pips higher against the EUR at the1.4716 level. The greenback also saw bullishness against the CHF and closed at 1.0260.
Yesterday, government reports showed that U.S. new home sales unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery even as businesses appeared to be stepping up investment. New single-family home sales fell 3.6% to a 402,000 unit annual pace from a downwardly revised 417,000 units in August. That has helped the U.S Dollar revive its safe haven appeal.
The other factor which led to the bullish Dollar yesterday was that U.S stocks fell, which boosted demand for the USD as a safe-haven currency. Moreover, renewed demand for the Dollar comes after a sharp drop earlier in the month, when the greenback hit 14- month lows versus the EUR, as investors favored foreign currencies and other riskier assets such as equities.
Looking ahead today, the two main news events that may have a very large impact on the Dollar and its main currency pairs in today's trading are the Advance GDP and Unemployment Claims around 12:30 GMT. These reports are very important as they are likely to impact the USD's volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow these releases.
