The dollar jumped against risk currencies like the euro immediately after weaker -than-expected new home sales in the United States today.
New single family home sales dipped 1.6 percent in February though prices increased. In February, sales fell to a seasonally adjusted 313,000, from a slightly downwardly revised 318,000 in January. Expectations were for improving sales, at a 330,000 annual rate.
The average home prices rose (non seasonally adjusted) to 8.8 percent to $233,700, which is the biggest one-month percentage rise in 14 months. Compared to February 2011, prices climbed 6 percent.
“The lower than expected number will not reassure the Fed on the strength of the U.S. economy but new home sales have lost their ability to accurately predict the housing market,” said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey. “Existing home sales are much more pertinent to the state of the U.S. housing market because of the over building of the past 10 years which is still working its way through to final sale. If anything today’s number is slightly negative for the dollar because it indicates a still weak U.S. housing sector.”
USDCAD surged from a pre-data low of 0.9992 to 1.0032 within ten minutes of the news which came in at 14:00 GMT.
EURUSD initially dipped on the news to 1.3220 from 1.3249 but then rebounded back up to 1.3252 within half an hour of the data.