The US Dollar (USD) Exchange Rate advanced to its best level in 8-months against the Euro (EUR) and firmed against the Pound (GBP) on Tuesday after data showed that US home prices rose more than forecast and consumer price inflation rose broadly in line with expectations.
According to data from the Washington based Labour Department the USA’s consumer price index increased by 0.3% in June adding to the 0.4% rise recorded in May.
The increase matched economist expectations but the core measurements which excludes volatile goods such as fuel and food increased by just 0.1%, below forecasts.
Year-on-year consumer prices increased at an annualised rate of 2.1% in June, largely in line with expectations and were unchanged from May’s figure.
Also offering support to the ‘Greenback’ was the release of a separate report which showed that house prices in the world’s largest economy increased by 5.5% in the 12 months through May as demand for housing improved following a harsh winter.
Month on month house prices rose by 2.6%.
On a seasonally adjusted basis, prices increased by 0.4%. Purchases of already owned houses leapt by 4.9%, the biggest monthly rise recorded since 2011.
The positive data adds to speculation that the Federal Reserve will raise interest rates before the end of the year.
The Euro exchange rate remains broadly lower as the European Central Banks monetary policy diverges from those seen in other major economies.
A diverging of central bank policies between the ECB, Federal Reserve and Bank of England was made evident last month when the ECB cut interest rates in order to tackle the threat posed by deflation.
In contrast the US and UK banks look set to raise interest rates sooner than initially expected as the respective economies improve.
With a lack of market moving Eurozone and US data due for release on Wednesday we can expect the ‘Greenback’ to remain stronger against the single currency.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,1.6456 ,
US Dollar,,Euro,1.6456 ,
US Dollar,,Canadian Dollar,1.6456 ,
US Dollar,,Australian Dollar,1.6456 ,
Pound Sterling,,US Dollar,1.6456 ,
Euro,,US Dollar,1.6456 ,
[/table]
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