Dollar rises on upbeat U.S. services and housing data

Market Review - 06/03/2019  00:00GMT  

Dollar rises on upbeat U.S. services and housing data

The greenback extended its recent winning streak and ended higher across the board on Tuesday as the release of upbeat U.S. services industries and home sales data fuelled speculation of additional rate hikes this year. Sterling fell to a 6-day low at New York open on renewed Brexit concern.  
  
The U.S. Institute of Supply Management said its non-manufacturing purchasing managers' index (PMI) rose to 59.7 from 56.7 in January.  
  
Reuters reported the Commerce Department said new home sales increased 3.7 percent to a seasonally adjusted annual rate of 621,000 units, the highest level since May 2018. November's sales pace was revised down to 599,000 units from the previously reported 657,000 units.  
  
Economists polled by Reuters had forecast new home sales, which account for about 11.2 percent of housing market sales, falling 8.7 percent to a pace of 600,000 units in December.  
  
Versus the Japanese yen, dollar traded with a firm bias in Asia and gained to 111.98 in European morning and despite retreating to 111.80 in New York morning, the pair jumped to a fresh 10-week high of 112.14 on upbeat U.S. data before retreating.  
  
The single currency met renewed selling at 1.1351 (Reuters) in Australia and fell to 1.1317 in European morning before rebounding to 1.3340 (Reuters). However, the pair then tumbled to a 13-day low of 1.1290 in New York afternoon on usd's strength before recovering.  
  
The British pound went through a volatile session. Cable initially fell to 1.3150 in Asia and then rose to 1.3199 in Europe on upbeat UK services PMI data. However, price met renewed selling there and tumbled to session lows of 1.3097 (Reuters) after UK Labour's John Martin McDonnell's remarks that few Labour lawmakers will back PM May's Brexit deal in vote as well as dollar's strength before staging a strong rebound to 1.3180 in late New York due partly to cross-buying in sterling especially vs euro.  
  
Reuters reported the IHS Markit/CIPS UK Services Purchasing Managers' Index suggested the world's fifth-biggest economy would grow by just 0.1 percent in the first three months of 2019 compared with the last three of 2018.   
  
After touching its lowest level in January since immediately after the Brexit referendum in 2016, the services PMI edged up to 51.3 from 50.1. A Reuters poll of economists had pointed to a weaker reading of 49.9 in February.  
  
In other news, Reuters reported Bank of England Governor Mark Carney said the fact that the central bank's most recent economic forecasts showed inflation above the BoE's target over its three-year forecast period meant investors had not priced in enough monetary tightening ahead.   
  
On the data front, Reuters reported the European Union's statistics office Eurostat said retail sales in the 19 countries sharing the euro rose 1.3 percent month-on-month in January after a 1.4 percent drop in December.   
  
They were 2.2 percent higher than in January 2018, accelerating from a 0.3 percent year-on-year rise in December. Economists polled by Reuters had expected a 1.2 percent monthly increase and a 1.9 percent annual gain.  
  
Data to be released on Wednesday :  
  
Japan household spending, Australia GDP, U.S. MBA mortgage application, ADP employment change, trade balance, Fed's Beige Book, and Canada trade balance, exports, imports, labor productivity, BoC interest rate decision, Ivey PMI.