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Forex - Dollar Drops as Sterling Shines on Brexit-Deal Optimism

ForexOct 19, 2018 14:41
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© Reuters. The dollar fell against its rivals on Friday.

Investing.com - The dollar fell against its rivals Friday as data showed pressures in the U.S. housing market continued last month, while a rise in sterling on positive comments from EU Brexit negotiator Michel Barnier also weighed.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.31% to 95.41.

The Commerce Department showed existing home sales fell 3.4% in September from the prior month to a seasonally adjusted annual rate of 5.15 million units. Economists were expecting a 0.7% decline to 5.3 million homes.

"There is a clear shift in the market," National Association of Realtors chief economist Lawrence Yun said, noting "homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year."

The pound, meanwhile, inflicted further damage on the dollar after EU Brexit negotiator Michel Barnier said a deal with the United Kingdom was 90% complete. But gains were limited on uncertainty over whether the U.K. parliament would ratify any potential Brexit deal amid constant infighting among members of UK Prime Minister Theresa May's party.

GBP/USD rose 0.35% to $1.3065.

The euro also kept the dollar on the back foot as analysts said most of bad news concerning the Italian budget issue were already baked into the common currency, but added that rising Italian government bond yields may keep a lid on gains in the euro.

"If the BTP (Italian government bond) spreads continue to develop like this, we would fill many Daily Currency Briefings with the subject of 'EUR weakness'," said Commerzbank (DE:CBKG).

EUR/USD rose 0.52% to $1.514.

USD/CAD fell rose 0.22% to C$1.3115 as the loonie was pressured by deluge of soft economic data including consumer inflation data that fell short of economists' estimates.

BMO Capital Markets said the negative data would not deter the Bank of Canada from raising interest rates next week, but tempered expectations for aggressive rate hikes, warning that "the much calmer inflation and consumer spending backdrop reinforces the lack of urgency" for future rate increases.

USD/JPY rose 0.24% to Y112.47.

Forex - Dollar Drops as Sterling Shines on Brexit-Deal Optimism
 

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