Dollar Rallies Despite Positive Market Sentiment

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October 26th, 2012

The US dollar rallied against the euro and the Japanese yen yesterday, but pulled back a little today. The currency sank versus the Great Britain pound as the UK economy expanded faster than experts have anticipated.

Pending home sales grew 0.3 percent last month. The report noted:

Home contract activity remains at an elevated level in contrast with recent years, but currently appears to be bouncing around in a narrow range. This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013.

Claims for unemployment benefits dropped from 392,000 to 369,000 and durable goods orders advanced as much as 9.9 percent in September.

The sterling outperformed the dollar as the United Kingdom exited recession. Britain’s economy grew 1.0 percent in the third quarter of 2012, following the 0.4 percent decline (revised from 0.7 percent) in the previous quarter. The expansion beat the analysts’ estimate of 0.6 percent.

EUR/USD was at 1.2943 as of 1:18 GMT today, following the yesterday’s drop from 1.2971 to 1.2932. USD/JPY traded near 80.22 today after climbing from 79.21 to 80.26 on the previous trading session. Meanwhile, GBP/USD jumped from 1.6035 to 1.6116 yesterday and advanced to 1.6124 on today’s session.

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