Strong Pending Home Sales Accelerate USD Declines (Midday Snapshot)


The USD remains very well offered as we head into the London fix, with the negative momentum from the talk of a [B]global diversification out of the USD[/B], accelerating on the back of the much stronger than expected US [B]pending home sales[/B] data which came in at a surprising +6.7% after analysts had been looking for a mild +0.5% print. This helped to bolster investor sentiment and in turn open a fresh wave of currency and equity buying. However, with gains already overdone and many of the major currencies having made fresh 2009 highs against the USD, talk of [B]real money[/B] USD bids into the London fix has generated some interest. Technically, the USD is very oversold and traders could finally be looking to consider long USD positions at current levels. At a minimum, USD shorts should begin to look to book profits on existing positions. In other news, [B]Morgan Stanley[/B] has announced its intention to raise $2.2B by selling common stock, in an effort to repay[B] TARP[/B]. Meanwhile, [B]Moody’s[/B] annual report puts the [B]US banking system[/B] credit outlook on negative watch. [B]US equities[/B] are all up some +0.50%, while on the commodity front, [B]gold[/B] tracks higher towards $985 and [B]oil[/B] trades lower back towards $68. Oil had been weighed down earlier in the session on some downbeat comments from the [B]OPEC research head[/B]. The[B] Canadian Dollar[/B] has taken over the top performing spot against the USD today, while the [B]Yen [/B]is the weakest.

[B]Written by Joel Kruger, Technical Currency Strategist for
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