The dollar edged higher at a fresh 14-year peak against a basket of major peers on Wednesday’s close after mixed results of the U.S. data has failed to reduce anticipations over the strength of the economy.
The consumer sentiment index climbed to 93.8 in November from an earlier reading of 91.6 in the previous month, beating analysts’ expectations for an unchanged rate, according to the University of Michigan.
Having said that, the U.S. Commerce Department also claimed that durable good orders turned into positive, which rose 4.8% last month, compared to the analysts’ estimate of a 1.5% gain.
Meanwhile, the core durable good orders, excluding the volatile transportation items, climbed by about 1% last month, compared to the analysts’ expected gain of 0.2%.
Apparently, the U.S. Department of Labor reported data of the initial jobless claims in the week ending November 19, which surged by approximately 18,000 to 251,000 from the earlier week’s reading of 233,000.
The less positive reports were followed by declines of the U.S. new home sales, which dropped by 1.9% to 563,000 units last month, disappointing analysts’ expectations of a 0.3% gain.
The dollar has found support on mounting expectations that President-elect Donald Trump’s proposed plan to boost fiscal spending and tax reduction will give a lift on the economic growth and inflation.
Rapid growth suggests inflation to spark, which would ready the Federal Reserve to tighten monetary policy at a faster pace than had previously been anticipated.
The U.S. dollar had strengthened as market participants indulge in betting that the U.S. central bank will increase the interest rates next month.
Strong Data Underpins Dollar Gains
The greenback soared to a near 14-year high during the course of Thursday’s session against other major currencies and beating emerging markets.
As a stronger data resulted from the world’s largest economy, it has sent the dollar to rally, which were boosted by thinner volumes as U.S. traders has fended off the Thanksgiving holiday.
"There doesn't seem to be anything stopping U.S. yields going higher in the near-term so I think people are going to stay on the dollar trend," said Michael Metcalfe, head of global macro strategy at State Street Global Markets.
"The only risk to this are that the dislocations in markets outside of the U.S., particularly in emerging markets, get to a point where they start to feed back into concerns (for the Federal Reserve as it looks to raise interest rates)," he said.
Current Stance of Dollar
The chart below illustrates USD/CAD price movement amid a stronger data from the world’s largest economy, which sent the currency to further rally.
Given a consolidating tone of the pair, market players still pampered in buying the US dollar due to the widely anticipated of a rate hike at a faster pace, including the upcoming Thanksgiving day.
Evidently, the pair continued to recover, which significantly stood above resistance 1.34490 in a light trading volume in today’s session.
As the illustrative chart above shows a consolidating movement of the pair, market participants are recommended to wait on the sidelines as there aren’t any supporting signal present as of this today’s close.
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