US Dollar Lackluster As COVID-19 Optimism, Strong Housing Data Weaken Safe-Haven Appeal

The US dollar is failing to muster up any momentum to kick off the trading week after experiencing a brief resurgence in recent sessions. The greenback is being weighed down by optimism that the latest surge in coronavirus cases could be easing and strengthening real estate data.

According to the National Association of Realtors (NAR), pending home sales skyrocketed 44.3% in May, the biggest one-month jump in US history. The market had penciled in a gain of 18.9%. Although pending home sales are still down at an annualized rate of 5.1%, they have improved from the 33.8% year-over-year crash from April.
Sales continued to tumble in the Northeast (-33.2%), the West (-2.5%), and the Midwest (-1.4%), but they picked up 1.9% in the South.
Is the nation’s housing market in full rebound mode? Lawrence Yun, NAR’s chief economist, sees improving market conditions.

The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10 percent — even after missing the spring buying season due to the pandemic lockdown.

Last week, it was reported that existing home sales plunged 9.7%, worse than the -3% median estimate. New home sales, however, soared at a better-than-expected rate of 16.6%. Mortgage applications fell 8.7%, down from the 8.8% increase in the previous week.
At the start of the trading week, the leading US stock indexes were in the green on hopes that the latest spike in confirmed COVID-19 cases might be easing. In Florida, which has transformed into a hotspot, reported an extra 5,409 cases on Sunday. But the positive development is that this is down from the 8,424 confirmed cases on Saturday.
On a national level, coronavirus cases do not appear to be subsiding. On Friday, there were more than 45,000 new infections, raising the country’s seven-day average to 41% from the prior week. Concerns over a second wave have been the primary factor in weakness in the stock market as of late.
The World Health Organization (WHO) sounded the alarm again by warning that the coronavirus pandemic is accelerating as more countries ease lockdown restrictions and reopen their economies. WHO chief Tedros Adhanom Ghebreyesus said during a virtual news conference from the agency’s Geneva headquarters:

Although many countries have made some progress, globally, the pandemic is actually speeding up. We all want this to be over. We all want to get on with our lives, but the hard reality is that this is not even close to being over.

The US Dollar Index, which measures the greenback against a basket of currencies, edged up 0.06% to 97.50, from an opening of 97.43, at 15:57 GMT on Monday. The index enjoyed a slight 0.5% weekly gain last week. Year-to-date, it is up more than 1%, but it had been up as much as 4% at the peak of the financial crisis.
The USD/CAD currency pair was unchanged at 1.3689. The EUR/USD advanced 0.14% to 1.1237, from an opening of 1.1220.
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