Better-than-expected economic indicators in the United States and comments by members of the U.S. Federal Reserve (Fed) set the tone for the U.S. dollar on Monday, as it gained 0.45%, breaking through the resistance level of 1.2740.
According to Dallas Fed President Robert Kaplan, indicators confirm that the U.S. economy is nearing full employment. Kaplan, who is a voting member of the Federal Open Market Committee (FOMC), therefore lent support to a continued tightening in U.S. monetary policy. He favours gradual and moderate rate hikes to avoid having to play catch-up later on.
Analysts expected a downturn in October New Home Sales in the United States after a strong performance in September. However, homebuyers were active once again (+6.2%), with the result surprising many observers and causing an immediate reaction in the greenback.
The economic indicator agenda is sparse today. We will, however, be keeping an eye on the Bank of Canada’s Financial System Review and comments from several Fed members. Confirmation hearings for Federal Reserve Chair nominee Jerome Powell also begin today.
Mark Donohue
Range of the day: 1.2710 – 1.2845