The Federal Reserve Bank’s surprise having worn off to some extent means that the U.S. Dollar Index was able to start to recover from the 7-month trough that it hit in the wake of the Fed’s newsflash. U.S. Treasury yields edged higher following better than expected U.S. data releases including existing home sales and the Fed’s Philadelphia Manufacturing Survey which indicated to investors that the Fed’s worries that those higher debt yields were negatively impacting the U.S. economy were invalidated.
Sales of existing homes in the all important housing sector surged to a 6½ year peak in August while the Fed’s Philadelphia survey showed a rise in the reading to 22.3 in September, up from 9.3 in August and far above analysts’ expectations of a slight rise to 10.0. That news is likely to muddy the waters further regarding timing of the Fed’s QE tapering which had been expected to imminently begin but which has now been pushed several months back.
Dollar Gets a Boost
The news helped to lift the U.S. Dollar broadly. As reported at 10:45 a.m. (JST) in Tokyo, the U.S. Dollar Index, used as a measure by investors to weigh the greenback’s strength against its major peers, climbed to 80.365 .DXY, moving off from Wednesday’s 7-month low of 80.060. The USD/JPY pair traded close to 99.50 Yen, well off of Wednesday’s trough of 97.76 Yen while the EUR/USD pair eased back to $1.3529, slipping from Wednesday’s high of $1.3569.