The U.S. dollar rose Wednesday, boosted by strong housing data, while euro was weaker after business confidence gauges missed expectations and the pound was dinged by prolonged uncertainty over Brexit.
The greenback also printed a fresh two-year high against Australia’s dollar on Tuesday after a string of flat economic data reinforced expectations the RBA will move to ease policy.
Several housing reports flowed this week. US existing home sales fell five percent from February to an annual rate of 5.30 million units, but new-home sales rose to an annual rate of 692,000, their highest rate since 2017.
The euro was modestly lower against the dollar after the German IFO business climate index came in at 99.2, below March’s reading of 99.6 and missed the forecasts pointing to 99.9. The index for current economic assessment also missed forecasts, coming in at 103.3 points in April relative to 103.8 in the month prior and 103.6 anticipated.
The weak data underscored the risks facing the euro zone economy, supporting further stimulus from the ECB to prevent the region from slipping into recession.
Sterling dipped to a two-month low at $1.2913 as fears remain about where Brexit is headed. The UK currency benefited from the removal of a no-deal Brexit, but that is offset by the prospects of PM Theresa May’s replacement and the threat to the economy from prolonged uncertainty.
Elsewhere, Gold bulls were on the sidelines because of the strength in the dollar, falling to a near four-month low on Tuesday as investors preferred riskier assets, dampening the safe-haven metal’s appeal.
The yellow metal has shown some confusion about what the central banks’ recent remarks about what their policies meant for the Gold outlook, but investors responded firmly to recent positive data, pushing the metal back below the $1,266 level for the first time since December 2018.
GBP/USD is pushing higher after initial dip on the day to test broken supports at around 1.2950. Technically speaking, the pair has broken a critical support where the lower boundary of a triangle pattern coincided with the daily 200 SMA, and sellers have now turned their eyes to February bottom at 1,2771.