The U.S. Dollar continues to struggle against major currencies, hitting an 8-month low versus the Pound Sterling and a 9-month low versus the Australian Dollar, following the release of yesterday’s better-than-expected housing data out of the United States. Appetite for risk has increased, as investors cut back on their demand for the U.S. currency and look instead to higher yielding currency. As reported at 2:48 p.m. (JST) in Tokyo, versus the U.S. Dollar the Pound Sterling rose to $1.6635, while the Australian Dollar traded at $0.826, both of them high multi-month trades, from October and September of last year, respectively.
One forex trader from Japan speculates that this optimistic trend will likely continue, with investors choosing not to buy the greenback, until some unforeseen event changes the global economic outlook.
The U.S. Dollar’s continued slide was precipitated by yesterday’s release of data from the U.S. which showed that in May, pending home sales had their largest 1-month gain in more than 7 years. This information suggests that the American housing market, a key driver in the U.S. economy, may finally be on the mend.
The market today will turn to the U.S. Federal Reserve Bank’s, Ben Bernanke, who is expected to testify before the U.S. House Budget Committee this afternoon. The outcome of that testimony will provide clues as to whether or not the Federal Reserve will accelerate the purchase of longer-dated U.S. Treasuries in an effort to hold down key interest rates.