October 29, 2009
The dollar extended its gains against the euro and some other major currencies on Wednesday as safety-haven demand for the greenback improved on weak U.S. home sales data.
Sales of newly constructed homes fell unexpectedly by 3.6 percent month-to-month in September to an annualized rate of 402,000 units, the Commerce Department reported on Wednesday. The estimate for June, July and August new home sales were revised down.
The number of unsold new homes fell for the 29th consecutive month to 251,000 units. The supply of new homes at current sales rates, an inventory yardstick, was unchanged at 7.5 months. Selling a new home has never been harder as the median time for sales stood at 13 months, the highest since records began in 1963.
One possible cause for the surprisingly decline is that inventory has fallen so low that builders do not have enough completed homes on hand, and are losing sales to the market of existing homes, said analysts of Global Insight. A second possibility is that the boost from the government tax credit for first time home buyers has past.
A separate report of the Commerce Department showed new orders for durable good rose by 1.0 percent in September. Orders of core nondefense capital goods (excluding aircraft) increased by 2.0 percent, while core shipments fell slightly.
The gains of new orders were primarily driven by machinery industries, with machinery orders up 7.9 percent. Other key industries, including motor vehicles and computers were about flat.
Currency traders were watching closely to the first estimate for U.S. third-quarter gross domestic product (GDP) to be released on Thursday. Economists of some major banks cut their outlooks for the data. Goldman Sachs economists cut their forecast to 2.7 percent growth from 3 percent. Morgan Stanley cut its outlook to 3.8 percent from 3.9 percent. Bank of America-Merrill Lynch lowered its forecast to 2.3 percent from 2.5 percent.
The euro bought 1.4719 dollars in late New York trading compared with 1.4809 dollars it bought late Tuesday. The pound rose to 1.6413 dollars from 1.6386 dollars.
The dollar rose to 1.0790 Canadian dollars from 1.0632 Canadian dollars, and rose to 1.0261 Swiss francs from 1.0214 Swiss francs. It fell to 90.79 Japanese yen from 91.81 Japanese yen.