The US dollar declined as the signs of the weakening US economy caused speculation that the Federal Reserve will maintain its quantitative easing program, undermining dollar’s strength.
The existing home sales decreased 0.8 percent to a seasonally adjusted annual rate of 5.05 million in April from 5.09 million in March. The Business Outlook Survey of the Federal Reserve Bank of Philadelphia showed that the manufacturing index slumped to 3.9 in May from 18.5 in April, instead of the expected increase to 20.2. The leading indicators unexpectedly contracted by 0.3 percent.
Previously, investors were encouraged by positive economic reports and anticipated an interest rates hike by the Fed. But with recent stream of bad economic reports an increase of the rates looks unlikely. The minutes of the Federal Open Market Committee also weren’t encouraging as they said that the growth of inflation is likely transitory influence of higher food and fuel prices.
EUR/USD traded at 1.4314 as of 4:52 GMT today after it rose from 1.4247 to 1.4307 yesterday. GBP/USD traded near 1.6230, following the advance from 1.6166 to 1.6234.
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