The US Dollar Index

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US Dollar – The US dollar was dealt an economic uppercut following the release of the new home sales report for the month of February in the New York morning. Countering existing homes data seen last week, the new home sales figure widely disappointed the market, solidifying the fact that home construction weakness is likely to loom over the economy. According to the Commerce Department, sales of newly constructed homes unexpectedly fell to the lowest in almost seven years as colder February temperatures dampened interest. Subsequently, purchases have dropped almost 4 percent to an annualized pace of 848,000 last month. The decline was more than expected with market consensus looking towards a 985,000 rate for the month. Combining this report along with other housing sector data, it seems that the recent report reflects a stabilization of sorts. Although new home sales were lower, existing home sales seem somewhat supported, albeit in the near term. However, it does purport a relatively negative undertone for the world’s largest economy. The bearish sentiment is helping to suppress the dollar in the session as traders continue to hear the specter of “spillover effects” lingering on US economic growth. Incidentally, the report comes just days before Federal Reserve Chairman Ben Bernanke is expected to speak before the Joint Economic Committee on the outlook for the economy. Although nothing different is expected to emerge from last week’s Federal Open Market Committee meeting, committee members will likely focus on rising concerns of the effects that the housing market may have on future near term growth. Notably, questions will be targeting potential weakness in consumer spending as lagging housing sector fragility. Should indications by the illustrious Bernanke paint a different picture, dollars may return to en vogue.