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The dollar held its biggest decline against the yen in almost two weeks, after U.S. housing data underscored the need for Federal Reserve support even as the central bank considers reducing its economic stimulus.
The U.S. currency was 0.2 percent from its weakest in a month versus the euro before data on home prices, following figures yesterday that showed residential sales unexpectedly fell. Home prices in the U.S. probably rose 0.8 percent in May, following a 0.7 percent advance the previous month, the smallest gain since January, the Federal Housing Finance Agency will report today, according to economists in a Bloomberg News survey. Previously owned home sales in the U.S. fell in June amid tight supply and increasing mortgage rates. Purchases slid 1.2 percent to a 5.08 million annualized rate, the National Association of Realtors reported yesterday. The median forecast in a Bloomberg survey was for a 5.26 million pace. Fed Chairman Ben S. Bernanke told Congress last week that any reduction in stimulus would depend on the performance of the economy.
Demand for the euro was supported ahead of data tomorrow forecast to show services and factory output in the region contracted at the slowest pace in more than a year. A euro-area composite index based on a survey of purchasing managers in both the services and manufacturing industries probably rose to 49.1 in July from 48.7 the previous month, London-based Markit Economics is predicted to say tomorrow, according to the median forecast of economists in a Bloomberg survey. That would match the level in March 2012. A reading below 50 indicates contraction.
EUR / USD: during the Asian session the pair rose to $ 1.3205
GBP / USD: during the Asian session the pair rose to $ 1.5375
USD / JPY: during the Asian session the pair traded in a range of Y99.10-60
Tuesday sees data on both sides of the Atlantic, but there are no scheduled appearances from central bank officials or leading politicians. The session gets underway with the release of French data. The main release is the July business climate indicator, including the July services and manufacturing sentiment indices. Sovereign bond sees The Netherlands re-open the off-the-run 3.25% Jul 2021 DSL and off-the-run 3.75% Jan 2042 DSL for between E1.5bln to E2.5bln. Eurozone Sovereign T-bill issuance sees Spain plan to tap the 3-month Oct 13, 2013 Letra and tap 9-month Apr 16, 2014 Letra. Also, then ESM plans to sell new 6-month Jan 23, 2014 for up to E2.0bln. Tuesday sees data on both sides of the Atlantic, but there are no scheduled appearances from central bank officials or leading politicians. There is only limited UK data at 0830GMT. The main release is the June BBA lending data. The UK housing market, boosted by the Funding for Lending Scheme and Help to Buy schemes, is gaining momentum. A further rise is mortgage approvals looks likely in June, with the highest forecast from the small number of analysts who predict this figure up at 40,000.
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