US Dollar falls on weak U.S. data, stocks eke out gains
New York (Nov 26) The dollar fell on Wednesday after disappointing U.S. home sales data, but global equity markets edged higher on hopes for more stimulus from the European Central Bank and the prospect that stocks may be a better investment than other alternatives.
The less-than robust data fed worries the U.S. economy might be losing momentum. Also feeding that concern were data showing U.S. consumer spending rose modestly in October while a key measure of business spending plans fell for a second straight month.
Sales of new U.S. single-family homes rose for a third straight month last month, but a downward revision to September's pace of sales suggested the housing market's recovery would remain gradual.
The Commerce Department said sales gained 0.7 percent to a seasonally adjusted annual rate of 458,000 units. Economists polled by Reuters had forecast a 472,000-unit pace last month.
"With the global backdrop being so weak, the onus is on the U.S. data to be very strong," said Chris McReynolds, head of U.S. Treasury trading at Barclays in New York. "Anytime it veers off that very strong course, people start decreasing their probability of a Fed move." Weaker data raises the likelihood that the Fed will wait longer to hike interest rates. The dollar index, a measure of the greenback's value against a basket of six currencies .DXY, fell to a session low of 87.520 before retracing to 87.655, down 0.30 percent.
The euro EUR= rose 0.25 percent against the dollar, to $1.2505. Against the yen, the dollar fell 0.16 percent, to 117.78 yen JPY=.
MSCI's all-country world equity index .MIWD00000PUS rose 0.19 percent to 427.58 points, and the pan-European FTSEurofirst index .FTEU3 closed 0.02 percent higher at 1,389.18.
European shares inched higher, with Germany's blue chip DAX index .GDAXI advancing for the 10th session in a row, as investors bet on further ECB stimulus. The DAX ended 0.6 percent higher, enjoying its longest winning streak since May 2013.
The Dow Jones industrial average .DJI fell 4.19 points, or 0.02 percent, to 17,810.75. The S&P 500 .SPX rose 3.45 points, or 0.17 percent, to 2,070.48 and the Nasdaq Composite .IXIC added 23.19 points, or 0.49 percent, to 4,781.44.
Benchmark U.S. Treasury yields fell to their lowest levels in over a month, while long-dated yields also hit more one-month lows on the weaker-than-expected U.S. economic data and continued low yields in Europe.
The benchmark U.S. Treasury 10-year note US10YT=RR rose 6/32 in price to yield 2.2376 percent.
German 10-year bunds DE10YT=TWEB fell to yield 0.73 percent, just above a trough of 0.716 percent hit in mid-October.
Oil prices fell on increased signals from OPEC that it would hold off making any major production cuts this week.
Benchmark Brent futures LCOc1 fell 58 cents to settle at $77.75 a barrel. U.S. crude CLc1 settled down 40 cents at $73.69 a barrel.
Source: Reuters
