Home Sales Data May Lead to Dollar Losses

The US dollar was able to advance on several of its higher-yielding currency rivals during European trading yesterday, as investors reverted to safe-haven assets amid concerns regarding the health of the Spanish banking system. After coming within reach of the 0.9900 level during early morning trading, the AUD/USD began to fall, eventually reaching as low as 0.9822 during mid-day trading. The EUR/USD fell close to 60 pips yesterday, eventually hitting 1.2516 before staging a slight upward correction to stabilize at 1.2540. Turning to today, dollar traders will want to pay attention to the US Pending Home Sales figure, scheduled for 14:00 GMT. At the moment, analysts are forecasting the figure to come in well below last month's result. If true, investors may take is as a sign that the US economic recovery is not proceeding quickly enough, which could result in dollar losses against the safe-haven Japanese yen. That being said, with the majority of attention still being devoted to euro-zone news, it is unclear how a disappointing home sale figure would impact the dollar against riskier currencies like the euro and GBP.

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