The U.S. Dollar firmed in Asian trade after it was reported that a keenly watched U.S. housing index improved for the third consecutive month, rising to a 7-month peak; according to the jointly issued report from Wells Fargo Bank and the NAHB, the reading improved to 55 this month from July’s 53, beating analysts’ expectations. U.S. bond yields also rebounded on investors’ hopes that a diplomatic solution can be found in the Ukraine-Russian crisis, which helped to sway sentiment in favor of the greenback. Analysts believe, however, that a clearer direction needs to be found for the dollar to break out of a range-bound trend.
As reported at 11:50 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 81.594 .DXY after having gained 0.2% in Monday’s trading session; the Index, used by FX traders to gauge the greenback’s relative strength, is approaching the month’s peak at 81.716 .DXY. The EUR/USD remained just slightly above a recently struck 9-month trough and was trading recently at $1.3357 while the USD/JPY trading at 102.61 Yen, rebounding from 101.51 Yen, its August low.
Federal Reserve in Focus
Market players are looking ahead to the Federal Reserve’s release of July’s policy minutes on Wednesday, and then will turn their focus to Thursday and the Jackson Hole summit, hosted by the Federal Reserve Bank. The release of consumer inflation figures will also help to determine the dollar’s direction, especially if there is a surprise which could impact the Fed’s decision regarding the timing of its next interest rate hike.