Dollar Rebounds After Three Days of Declines; New Home Sales Are Very Strong

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THE TAKEAWAY: US New Home Sales vastly surpass market expectations > Dollar Index rebounds after three days of weakness

The USD finally regains some legs after three consecutive days of weakness.The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) gains +39 (+0.36%) to $10786 at the time of writing. The dollar was certainly helped by the strongest New Home Sales data since January: +8.3% June m/m actual; +1.7% Bloomberg News survey expected.

In Europe, various countries reported PMI data better than expectations. The Eurozone PMI Composite (JUL) came in at 50.4 versus the Bloomberg News survey consensus of 49.1. Germany and France both reported PMI Manufacturing numbers above Bloomberg News survey expectations.

Lastly, data from China disappointed. The HSBC Flash Manufacturing PMI missed Bloomberg News survey expectations: 47.7 July actual; 48.2 expected; 48.2 prior.

Bond markets are showing violent declines today. These moves are most pronounced in North America and Europe. 10YR government bond yields trade as follows: US +7.9bps (+3.15%) to 2.584%; Germany +9.7bps (+6.26%) to 1.646%; Italy +0.0bps (+0.00%) to 4.363%; Singapore +6.3bps (+2.64%) to 2.444% at the time of writing.

Global equities trade mixed, with Europe strongly outperforming: S&P -0.12%; Euro Stoxx +1.05%; FTSE +0.31%; Nikkei -0.32%; Hang Seng +0.24% at the time of writing.

Commodities are also mostly weaker, with crude oil falling more steeply than base metals: WTI -1.15%; Brent -1.00%; LME Copper +0.14%; COMEX Copper +0.20%; Shanghai Copper -0.08% at the time of writing.

AUDUSD 15-minute Chart: July 24, 2013

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Dollar_Rebounds_After_Three_Days_of_Declines_New_Home_Sales_Are_Very_Strong_body_Picture_4.png, Dollar Rebounds After Three Days of Declines; New Home Sales Are Very Strong

Charts Created using Marketscopeprepared by Kevin Jin

The AUDUSD is the sharpest declining major FX pair today, down -1.13% at the time of writing. Australia released CPI data early in the Asian session, which came in at +2.4% 2Q y/y actual; +2.5% Bloomberg News survey expected. The pair declined throughout most of the day, breaking below $0.9200 towards London Close.

GBPUSD 15-minute Chart: July 24, 2013

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Dollar_Rebounds_After_Three_Days_of_Declines_New_Home_Sales_Are_Very_Strong_body_Picture_3.png, Dollar Rebounds After Three Days of Declines; New Home Sales Are Very Strong

Charts Created using Marketscopeprepared by Kevin Jin

The GBPUSD is mostly flat today, trading -0.04% lower at the time of writing. The pair traded in a 60 pip range between 1.5320 and 1.5380. The UK will notably release its 2Q GDP at 8:30 GMT tomorrow.

EURUSD 15-minute Chart: July 24, 2013

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Dollar_Rebounds_After_Three_Days_of_Declines_New_Home_Sales_Are_Very_Strong_body_Picture_2.png, Dollar Rebounds After Three Days of Declines; New Home Sales Are Very Strong

Charts Created using Marketscopeprepared by Kevin Jin

The EURUSD is flat on the day, up +0.01% at the time of writing. The pair was unable to meaningfully break either below $1.3200 or above 1.3250 despite strong PMI figures.

USDJPY 15-minute Chart: July 24, 2013

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Dollar_Rebounds_After_Three_Days_of_Declines_New_Home_Sales_Are_Very_Strong_body_Picture_1.png, Dollar Rebounds After Three Days of Declines; New Home Sales Are Very Strong

Charts Created using Marketscopeprepared by Kevin Jin

The USDJPY is strongly higher by +0.85% at the time of writing. The pair is roughly +100 pips higher and had little trouble breaking through ¥100.00 which occurred near New York Open.

--- Written by Kevin Jin, DailyFX Research

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