Dollar ends broadly higher as upbeat U.S. data and rising global stocks boost risk sentiment

Market Review - 18/01/2020  01:54GMT  

Dollar ends broadly higher as upbeat U.S. data and rising global stocks boost risk sentiment

The greenback continued its previous day's gain and climbed to a 2-week high on upbeat U.S. data, rally in global equities and U.S. Treasury yields also boosted risk sentiment. Sterling fell across the board on the release of weak U.K. retail sales data.  
  
Reuters reported U.S. homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back on track amid low mortgage rates, and could help support the longest economic expansion on record.  
  
Housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Data for November was revised higher to show homebuilding rising to a pace of 1.375 million units, instead of advancing to a rate of 1.365 million units as previously reported.   Economists polled by Reuters had forecast housing starts would increase to a pace of 1.375 million units in December.  
  
Versus the Japanese yen, although dollar jumped to a fresh 7-1/2 month peak at 110.28 at Asian open, price erased its gains and dropped to session lows at 110.06 in New York morning due to cross unwinding in recent short jpy positions. Price last traded at 110.14 near the close.  
  
The single currency met renewed selling in Asian morning at 1.1142 and intra-day decline gathered momentum in European trading after break of Thursday's 1.1129 low, price later tumbled to a near 1-week low of 1.1087 in New York morning due to renewed usd's strength.  
  
The British pound swung wildly in hectic trading. Despite moving narrowly in Asia, price rose briefly but sharply to a 1-week high of 1.3120 (Reuters). However, cable quickly erased its gains and tumbled in European morning as release of weak U.K. retail sales increased speculation of a rate cut from the Bank of England later this month and the pair later hit session lows of 1.3007 ahead of New York close.  
  
Reuters reported British consumers failed to increase their spending in December for a record fifth month in a row, adding to signs of a weakening economy that might prompt the Bank of England to cut interest rates this month.    Official data on Friday showed monthly sales volumes fell by 0.6% from November, defying the median forecast for a rise of 0.5% in a Reuters poll of economists.  
  
In other news, Reuters reported Philadelphia Federal Reserve Bank President Patrick Harker said Friday that a robust labor market is boosting consumer confidence and lifting the U.S. economy, despite headwinds such as a global slowdown and trade uncertainty, which are dragging down business investment.    The policymaker expects the economy to grow by about 2% this year and projects that inflation is on track to hit the central bank's 2% target, he said in remarks prepared for delivery at a banking forum in Somerset, New Jersey.  
  
Data to be released this week :  
  
UK Rightmove house price index, Japan industrial output, capacity utilization, Germany production prices, and U.S. market holiday on Monday.  
  
Japan Bank of Japan interest rate decision, France business climate, UK ILO unemployment rate, employment change, average weekly earnings, claimant count, Germany ZEW economic sentiment, ZEW current conditions, EU ZEW survey expectations, Canada manufacturing sales, U.S. redbook, and New Zealand GDT price index on Tuesday.  
  
Australia consumer sentiment, France business climate, Italy industrial orders, industrial sales, UK PSNB, PSNCR, U.S. MBA mortgage applications, national activity index, monthly house price, existing home sales, and Canada CPI, new housing price index, wholesale trade, Bank of Canada interest rate decision on Wednesday.  
  
Japan exports, imports, trade balance, industrial activity, leading indicator, Australia employment change, unemployment rate, EU ECB interest rate decision, ECB deposit rate decision, consumer confidence, and U.S. initial jobless claims, leading index, KC Fed manufacturing index on Thursday.  
  
New Zealand CPI, Australia manufacturing PMI, services PMI, Japan national CPI, national CPI, Jibun Bank manufacturing PMI, China market holiday, France Markit manufacturing PMI, Markit services PMI, Germany Markit manufacturing PMI, Markit services PMI, Italy trade balance, EU Markit manufacturing PMI, Markit services PMI, UK manufacturing PMI, services PMI, Canada retail sales, retail sales ex-autos, and U.S. Markit manufacturing PMI, Markit services PMI on Friday.