Forex - Dollar falls on disappointing U.S. housing-sector data

A A A - The dollar traded lower against most major currencies on Monday after a widely-watched industry report on the U.S. housing sector missed expectations and fueled expectations for a very gradual withdrawal of the Federal Reserve's bond-buying program.

Fed bond purchases aim to drive recovery by suppressing interest rates, weakening the dollar as long as they remain in effect.

In U.S. trading on Monday, EUR/USD was up 0.41% at 1.3802.

The National Association of Realtors reported earlier that its pending home sales index increased by a seasonally adjusted 0.2% in November, far shy of market expectations for a 1.0% gain. Pending home sales for October were revised to a 1.2% decline from a previously reported drop of 0.6%.

The disappointing data sent the greenback falling, wiping out gains locked in when the Federal Reserve announced it would trim USD10 billion from its USD85 billion in monthly bond-buying purchases beginning in January.

The Fed has said it may taper the program even more should data show that economic recovery is gaining steam while adding soft patches could prompt the U.S. central bank to hike up monthly bond purchases to ensure price and labor-market stability.

The euro, meanwhile, remained supported after European Central Bank Governing Council member Jens Weidmann on Friday said keeping interest rates low may endanger political reforms.

According to Germany's Bild newspaper, Weidmann said low inflation shouldn't be used to justify loose monetary policy. "We must take care to raise interest rates again in a timely manner should inflation pressures build," he reportedly added.

The greenback was down against the pound, with GBP/USD up 0.23% at 1.6517.

The dollar was down against the yen, with USD/JPY down 0.05% at 105.12, and down against the Swiss franc, with USD/CHF down 0.45% at 0.8876.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.62% at 1.0643, AUD/USD up 0.47% at 0.8911 and NZD/USD trading up 0.59% at 0.8202.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.41% at 80.14.
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This article appears in: Investing , Forex and Currencies

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