Dollar Moves Higher
May 28th, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar rose against the euro for the second straight day. Late Wednesday, the euro was trading at $1.3908 vs. $1.3984 on Tuesday.
Analysts said that mixed housing data and worries that rising interest rates might limit an economic recovery were responsible for moves into the perceived safe haven. “The U.S. dollar is still the reserve currency of the world and there is still a great deal of demand,” said Dan Cook, of IG Markets, Inc.
The day’s big number was from the National Association of Realtors, which said sales of existing homes rose 2.9% in April, in line with economists’ expectations. Sales have been nearly unchanged for six months.
How meaningful that is, is an open question. The stats show first-time buyers accounting for about 40% of sales in April, as the federal government offers them $8,000 to use for a down payment. In addition, another 45% were distressed sales of one kind or another. “This is a non-regular market,” said NAR’s chief economist, Lawrence Yun.
Further, inventories of unsold homes on the market rose 8.8% in April to 3.97 million, representing 10.2 months of sales, the highest level since November. And the median sales price fell 15.4% over the past year, the second largest year-over-year percentage decline on record.
The buck also got a boost after Erkki Liikanen, a member of the ECB’s Governing Council, said that the European Central Bank’s current key lending rate of 1% — an all-time low — is “appropriate” for the current economic situation, but that room remains to lower the rate further if needed.
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