Home Daily Commentaries Strong housing data pushes DXY upward

Strong housing data pushes DXY upward

Daily Currency Update

The dollar index (DXY) is moving in an upward direction, currently sitting at 102.59. This is largely due to US housing data which showed building permits hit 1.5 million, up 5.2% from April. Strong housing data is evidence that construction for new homes is picking up as well. Furthermore, housing starts in the US reached 1.6 million, up a staggering 21.7% from April. Similarly, housing completions hit 1.5 million, up 9.5% from April. Combining this ballet of positive housing data indicates very positive growth amid a high-interest rate environment in the US. This could lead to a more hawkish Federal Reserve stance during the next interest rate decision meeting.

Key Movers

The Reserve Bank of Australia meeting notes from their last discussion reveal that the board believe recent rate hikes were ‘finely balanced.’ This is easing expectations for further hikes in the coming months and anticipated a somewhat bearish tone for the AUD going forward.

Information out of Mexico showed retail sales beating expectations in April at 1.5% versus the expected 0.2%. The Mexican economy is remaining strong amid higher interest rates.

In European news, the German Producer Price Index (PPI) data was released for May which shows producer prices for industrial products. The PPI data came in at -1.4% compared to the previous year. Month-over-month PPI rose at 1%, the smallest increase since January 2021. This data is further proof that the European economy is slowing down and reducing the likelihood of further rate hikes in the near future.

USD/CAD is up slightly around 0.2% as the market eyes data being released out of Canada tomorrow, specifically new housing prices and monthly retail sales. This data will provide more clarity on where the Bank of Canada (BoC) will take rates going forward. The USD/CAD pair is rebounding off 9-month lows near the 1.319 level. The recent strength of the CAD is largely due to the hike from the BoC in contrast to the Federal Reserve’s decision to keep rates unchanged.

Expected Ranges

  • EUR/USD: 1.0906 - 1.0946 ▼
  • GBP/USD: 1.2724 - 1.2807 ▼
  • AUD/USD: 0.6765 - 0.6855 ▼
  • USD/CAD: 1.3206 - 1.3247 ▲