Dollar eases from highs on uncertainty over Fed, U.S. election
The U.S. dollar dipped against a basket of major currencies on Wednesday, reflecting nervousness surrounding Federal Reserve monetary policy and the U.S. election, a day after touching a nearly nine-month high.
Analysts said expectations the Fed would raise interest rates this December were fully reflected in the dollar's recent rally, putting the currency at risk of losses if any contrary signals from Fed officials crop up between now and the end of the year.
The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.09 percent at 98.634 after touching 99.119 on Tuesday, its highest since Feb. 1. The index has risen about 3.2 percent this month, putting it on track for its best month in nearly a year.
U.S. housing, trade data boost third quarter GDP growth prospects
New U.S. single-family home sales unexpectedly rose in September, pointing to sustained demand for housing even as data for the prior three months were revised lower.
Other reports on Wednesday suggested a stronger pickup in economic growth in the third quarter than is currently anticipated. The goods trade deficit narrowed sharply, while both wholesale and retail inventories increased in September.
The Commerce Department said new home sales increased 3.1 percent to a seasonally adjusted annual rate of 593,000 units last month, pulling them close to a nine-year high touched in July. However, the pace for the prior three months was revised down by a total of 85,000 units from previous estimates.
But advance data on Wednesday showing the goods trade deficit falling 5.2 percent to $56.1 billion in September amid strong exports suggested that third-quarter GDP growth could exceed expectations.
In addition, wholesale inventories increased 0.2 percent in September and retail inventories rose 0.3 percent.
Barclays upgrades U.S. third-quarter GDP growth view to 3.0 percent
Barclays economists on Wednesday raised their growth estimate on U.S. gross domestic product in the third quarter to a 3.0 percent annualized rate from 2.6 percent following the government's release of an advance report on September trade and wholesale inventories.
"Exports of industrial supplies, capital goods, consumer goods, and other goods all posted solid gains on the quarter," they wrote in a research note.
Oil down 1 pct on OPEC worry, offsetting U.S. inventory fall
Oil settled down more than 1 percent on Wednesday even after a surprise drawdown in U.S. crude inventories, as traders remained cautious that OPEC would be able to cut production come late November.
U.S. crude stockpiles fell 553,000 barrels last week, the U.S. Energy Information Administration (EIA) said, compared with the 1.7 million-barrel build analysts polled by Reuters forecast.
Iran, Libya, Nigeria and Venezuela are expected to be exempted from OPEC's planned production cut, which seeks to cut about 700,000 barrels per day (bpd) from an estimated glut of 1.0 million to 1.5 million bpd.
Iraq has said it would not participate, while Indonesia's state oil firm is targeting an output increase.
Unless non-member Russia joins, the onus of a potential cut would fall on Saudi Arabia, Kuwait and the United Arab Emirates.
Reference: Reuters
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