Dollar Surges as Yields Move in Favor of the Greenback

The dollar is up across the board led move with good news on the Greek front transferring as a sell-on-the-fact style response in Asia, although there is no deal yet with the European Union. Monday’s better than expected US existing home sales gave dollar bulls the ammunition needed to push the greenback higher. With the risk on trade in full bloom, a deal would be the impetus for a full blown breakout.

The greenback gained traction against sterling following a weaker than expected UK CBI industrial trends survey for June which disappointed investors. The headline total orders balance dropped to a -7 reading from -5 in May, and well off the median forecast for +1. This is the lowest outcome since July 2013. The export orders component fell to -17 from 7, and selling prices dipped to -7 from +2. The data highlights weak export performance due to the strong trade-weighted value of sterling.

The 5.1% May U.S. existing home sales bounce to a 5.35 million pace beat the prior 5.31 million four-year high to leave the strongest rate since the spike to a 5.44 million clip back in November of 2009 with the homebuyers’ tax credit. Inventories rose 3.2% to a still-lean 2.29 million level that marks a 1.8% year over year rise, while a shortage of supply and upward seasonal pressure allowed a 4.6% median price rise to $228,700 new cycle-high, as prices now sit near the all-time high of $229,500 in June of 2005.

Existing home sales have bounced sharply in the seasonally important spring season after a dismal Q1 performance, alongside big rebounds for pending sales, permits, and the MBA purchase index, though we still have an anemic pace of housing sector recovery overall, with lean inventories and a cyclical price uptrend led by gains into Q2 of each year.

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