Dollar Hits 4-month Peak after IMF, Housing Data Report
- Exo Capital
- Jul 19, 2016
- 2 min read
Two events led to the dollar hitting a 4-month high against its rival currencies in Tuesday’s trading: First, upbeat housing data was posted stateside and the International Monetary Fund (IMF) pondered on the economic shock from the Brexit vote towards Britain and the rest of the euro zone.
The US dollar index reached an intraday high of 97.17, a level last hit in March. It last traded higher 0.56% at 97.10.
USD/JPY crawled back towards the high in June 24, during which the result of the Brexit referendum was announced.
The IMF published its updated global predictions today, reducing the growth prospect in the global economy this year to 3.1% from 3.2% previously. However, a rebound of 3.4% is anticipated in year 2017.
IMF’s forecast of Britain was down to 1.7% from the prior 1.9% this 2016 and cutting its 2017 growth to 1.3% from April’s 2.2%, the sharpest among predictions. In the Brexit repercussions, the euro zone had its 2017 growth predictions cut to 1.4% from 1.6%.
Meanwhile, IMF slashed US forecast to 2.2% from 2.4%, but also mentioned that the Brexit impact on the US economy would be rather muted and elaborated that the cut was because of weaker Q1 gross domestic product (GDP).
With this, GBP/USD fell 0.99% to 1.3125, while EUR/USD climbed to the 1.10 level.
The Australian and New Zealand dollars dipped as investors ramped up bets that both central banks could ease monetary policy as early as August. AUD tumbled to more than a one-week low, while NZD hit a three-week trough.
Loonie was also weaker as crude continuously declining. USD/CAD last rose 0.64% to 1.3025.
Housing Data
The US Commerce Department reported that housing starts rallied 4.8% to reach a seasonally adjusted 1.189 million units, surpassing predictions for a 1.17 million gain.
Building permits, a leading indicator for the housing market, climbed 1.5% to a seasonally adjusted 1.153 million units as well. The figures for this hovered above estimates for a 1.15 million increase.
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