USD weaker after quick rally

Story link: USD weaker after quick rally

The US dollar was weaker in relation to the yen, the Australian dollar and the New Zealand dollar Monday on concerns that the recent rally for the greenback, which has added 8.4 percent versus the euro since July, was too quick.

The declines for the dollar came ahead of separate reports on wholesale costs and housing starts, due from the Labor and Commerce departments, respectively, on Tuesday.

Housing starts are forecast to have dropped to an annual rate of 960,000 in July, the fewest starts in 17 years, which would decrease the chances that the Federal Reserve will hike interest rates this year.

In late morning trade in New York, the dollar traded at $1.4706 to the euro, while it took ¥110.2300 to buy a greenback, 87.01 cents US to buy an Aussie, and 71.11 cents US to buy a New Zealand dollar.

The gains for the Aussie and the kiwi against their US counterpart came even though interest rates in both Australia and New Zealand are expected to go lower next year, but gains for the New Zealand currency were limited by a report that the service sector there contracted in July for the fourth month in a row.

Meanwhile, the pound weakened versus both the euro and the greenback on the news that UK house prices are down again this month.

By late morning in New York, the pound traded at 78.85p to the euro while it took $1.8653 to buy a pound.

Internet house-price tracker Rightmove (LSE: RMV) reported that the average price for a home in Britain was down 4.8 percent in August from the same month last year and has dropped 2.3 percent since last month.

In addition, an index of business sentiment from Lloyds TSB (LSE: LLOY) showed confidence at its lowest level in at least six years among over 200 companies surveyed.