Today's Top 3 US Dollar Drivers

You wouldn’t know it unless you looked past Euro and Pound sterling gains on the day, but the US dollar is trading higher against the Japanese yen and the commodity dollar currencies (AUD, CAD, NZD). Driving the greenback higher are three key economic reports that continue to support the rising notion of an imminent US economic recovery.

To the market’s surprise, officials at the US Commerce Department revised gross domestic product figures higher for the third quarter. Report results show that a surge in exports and inventory building supported the revision to 2.7%, from a previous 2% annualized pace. For the record, exports skyrocketed by 1.1%, reversing a previous 1.6% decline.

All in all, the results are seen as widely bullish and sets up fourth quarter growth to be on pace to match or rise above third quarter results. These notions have been bolstered by expectations of positive holiday spending – which Fitch Ratings expects to gain in the 3-4% range. A higher pace of growth would bolster demand for the US dollar, particularly against notions of a more fragile European economy.

In addition, US jobless claims dropped once again, falling by 23,000 to 393,000. Although still a bit higher than pre-Sandy releases, the decline is symbolic in the fact that it is the second consecutive drop in claims since the 439,000 surge witnessed two weeks ago. Moreover, it shows that the negative effects on employment caused by Sandy are slowly dissipating, normalizing survey results – and allowing them to be truly reflective of current conditions. Should the sentiment ring true, jobless claims are likely to fall further through the holiday season, bolstering recovery speculation.

And, in another sign of housing sector recovery, pending home sales in the US surged to the highest level in more than 5 years. The last time pending home sales gained in similar fashion was before the summer of the US financial crisis. According to the National Association of Realtors index, current contract signings jumped by 5.2%. The figure combines with recent new home sales and other housing sector improvements to support higher expansion estimates for the quarter ending in December.

These three reports, in addition to bullish expectations for tomorrow’s Chicago PMI survey, continue to fuel dollar gains. The trend is likely to continue as long as economic data remains positive for the world’s largest economy and fiscal cliff concerns are kept at a minimum.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.