Friday, November 17, 2006

Forex News: Dollar Drops after Soft Housing Data

Forex News

The dollar dropped after a report showed U.S. housing market is cooling down, raising concern over the U.S. economy. The dollar weakened to 1.2844 versus the euro and moved down to 117.53 against the yen.

The building permits dropped from 1638k to 1535k in October, the lowest since December 1997. Housing starts declined from 1772k a month earlier to 1486k, also coming in short of the expectation of 1680k. Soft housing figures weigh on the dollar, however, the greenback is supported as the market still think the chance of a Fed rate cut by the first quarter next year is very low based on strong manufacturing growth. The dollar is trading in the narrow range between 1.2810-1.2840 in late U.S. session.

Besides, though many oversea central banks, including China, Russia, Swiss and Middle East countries planned to diversify their foreign exchange reserves away from the U.S. dollar, the impact of this on FX market is limited.


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