US Dollar Looks to Home Sales Data to Build on Yellen-Inspired Gains

The US Dollar looks to July’s New Home Sales figures to build on gains after supportive comments from Fed Chair Yellen drove prices to a six-month high.

Talking Points:

• US Home Sales Data May Help Dollar May Build on Yellen-Inspired Gains

• Euro May Fall as German IFO Survey Boosts ECB Stimulus Expansion Bets

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The US Dollar outperformed in overnight trade as Asian markets took their turn to respond to supportive remarks from Fed Chair Janet Yellen at the Jackson Hole Economic Symposium last week. The greenback added as much as 0.2 percent on average against its leading counterparts, setting a six-month high.

The expected time gap between October’s end of “QE3” asset purchases and the first Fed interest rate hike may shrink further on the back of supportive US economic data. July’s New Home Sales report headlines the docket to start the week, with a print at 429,000 expected compared with 406,000 in the prior month.

US economic news-flow has markedly improved since early April. Indeed, a Citigroup index measuring realized outcomes relative to consensus forecasts now shows data results are outperforming expectations by the widest margin in six months. This hints that analysts are underestimating the vigor of the US economy, opening the door for an upside surprise that fuels continued gains in the US unit.

Germany’s IFO Survey of business confidence is in the spotlight in European hours. The headline Business Climate gauge is expected to tick lower to 107.00 in Augusts’ report, marking the lowest level in 13 months. A soft print may stoke speculation about an expansion of ECB stimulus efforts, particularly after dovish comments from the central bank’s President Mario Draghi last week. Needless to say, such a turn of events bodes ill for the Euro and we remain short EURUSD.