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Forex - Dollar on Track for Weekly Gain; USD/CAD Surges 1%

Published 2017-10-20, 12:47 p/m
Updated 2017-10-20, 12:51 p/m

Investing.com – The dollar rose sharply against a basket of major currencies on Friday as signs of progress on tax reform bolstered investor expectations of a fiscal lift to the economy while upbeat housing data boosted sentiment.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.57% to 93.54.

The National Association of Realtors said on Friday existing home sales rose 0.7% to a seasonally adjusted annual rate of 5.39 million units last month.

That beat economists forecast of a 1% decline to a rate of 5.30 million.

The upbeat housing data comes amid growing expectation that tax reform will be passed sooner-rather-than later after the Senate approved the Republican-back budget on Thursday.

The budget approval is a crucial step forward for tax reform as it will allow Republicans to move ahead with tax cuts without support from Democrats.

On the monetary policy front, however, investors mulled over reports suggesting that Federal Reserve Governor Jerome Powell is leading the race to succeed Janet Yellen as next Fed Chairman.

President Donald Trump is expected to make a final decision by Nov. 3, choosing between current Fed Chair Janet Yellen, National Economic Council Director Gary Cohn, Fed Board Governor Jerome Powell, former Fed Governor Kevin Warsh or Stanford University economist John Taylor.

Powell is widely viewed as the least hawkish candidate - apart from Janet Yellen - compared to his peers on the shortlist to head the Federal Reserve in February.

Elsewhere a slump in the Canadian dollar added to upside momentum in the greenback after Canada released subdued inflation data and retail sales data growth missed expectations.

USD/CAD rose 1.03% to C$1.2615.

EUR/USD fell 0.64% while EUR/GBP fell 0.62% as investors looked ahead to the European Central Bank policy meeting slated for next week.

GBP/USD rose 0.24% to $1.3190 as both UK Prime Minister Theresa May and European Council president Donald Tusk attempted to downplay claims that Brexit negotiations had reached an impasse.

USD/JPY added 0.77% to Y113.41.

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