US Housing Data Fuels Upside Momentum of Greenback

US housing data released today impressed analysts, beating even optimistic forecasts. It allowed the US dollar to gain for the second straight session against the euro and for the third session versus the Great Britain pound and the Japanese yen.
Both US housing starts and building permits rose at the seasonally adjusted annual rate of 1.14 million in April, and both indicators exceeded forecasts. Housing starts were at the highest level since December 2007 while building permits were at the highest since December 2008. It was a welcome change after last month’s disappointing figures.
Economists warn against being overexcited by the positive news as it is uncertain at the present time if the housing market will continue to improve. Besides, even the favorable data does not make it likely for the Federal Reserve to start monetary tightening as early as the next month. And without an interest rate hike in June the dollar will probably struggle to maintain its rally.
EUR/USD dropped from 1.1314 to 1.1148 as of 20:43 GMT today. GBP/USD slid from 1.5652 to 1.5511, touching the daily low of 1.5447. USD/JPY gained from 119.97 to 120.67, trading near the highest level since April 13.

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