US dollar weakens on slow home sales

US dollar weakens on slow home sales

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The US dollar weakened on Monday after new figures from the Commerce Department showed that the sale of new homes dropped by 3.9 percent in February. It was the worst month for new home sales since August 2000. The news, which disappointed after data last week showing that existing home sales were better than had been expected in February, made it more likely that the Federal Reserve rates will cut interest rates in the near term.

At mid-afternoon in New York, the greenback had dropped 0.2 percent against the Japanese yen, to ¥117.85, while it fell 0.4 percent versus both the euro and the Swiss france to $1.3335 and SFr1.2140 respectively.

The yen declined after the minutes from February’s meeting of the Bank of Japan, where the decision was made to raise interest rates there, were released. The minutes indicated that most board members of the Bank expect that the Japanese interest rate will rise gradually as long as the nation’s economy continues its recovery. The Japanese currency was 0.2 percent lower against both the euro and sterling, to ¥157.14 versus the shared currency and to ¥232.05 against the pound.

Sterling strengthened after property research company Hometrack said that UK house prices gained an annualized 6.7 percent in March, growth that was stronger than had been anticipated. Analysts said that if mortgage lending figures were also strong, it was likely that the Bank of England would have to raise interest rates in April. The UK currency was 0.1 percent higher in relation to the euro, to £0.6770, while it was up 0.4 percent to $1.9692 versus the US dollar.

Elsewhere in Europe, the Norwegian krone added 0.4 percent to NKr8.110 versus the euro on the news that Norway’s unemployment rate is the lowest it has been in 20 years. Interest rates there are expected to go up to around 5 percent, from their current 4 percent, by the end of the year.

New Zealand’s trade deficit was lower than expected, sending the dollar there up 0.9 percent versus the US dollar, to $0.7161.