Buck Finds Footing As Stock Rally Fizzles

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The dollar steadied Monday afternoon as relatively encouraging housing data failed to inspire more gains on Wall Street, fueling speculation the rally in equities may have fizzled out.

With traders not expressing much risk aversion as the bulls tired out, the dollar found its footing after a brutal stretch versus the higher-yielding euro and loonie.

The deflated greenback found support after testing its December lows against the euro. The buck touched an 8-week low of 1.4297 before stabilizing near 1.4200 by mid-day. Still, a move back to 1.4340 would take the dollar to its worst level since the last week of 2008.

Still stinging from last week's evidence that the Canadian economy is in comparatively decent shape, the dollar dropped to C$1.0780 against the loonie, its lowest level since September 2008. From there, the buck was able to rise back above C$1.0820.

On the flip side, the dollar rose to a 3-week high of 95.31 against the slumping yen, moving further away from a 5-month low of 91.74, set about 2 weeks ago.

Uncertainty continued to characterize the pound/dollar pair, which hovered around 1.6500 to stay in the middle of a long-term range.

With new home prices moving back to the downside, the Commerce Department released a report on Monday showing that new home sales in the month of June increased by much more than economists had been anticipating.

The report showed that new home sales jumped 11 percent to an annual rate of 384,000 in June from the revised May rate of 346,000. With the increase, new home sales rose to their highest rate since 390,000 in November of 2008.

While sales were down 21.3 percent compared to the same month a year ago, they still came in well above the economists' expectations.

The S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9 AM on Tuesday. Economists expect a 17.80% year-over-year decline in the 20-city composite house price index for May. The Conference Board is scheduled to release its consumer confidence report for July at about 10 am ET on the same day. The report, which is based on a survey of 5,000 U.S. households, is expected to show that the consumer confidence index slipped to 48.7 in July.

(Market News Provided by RTTNews)