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EUR/USD Drops on Consumer Confidence & Fed Outlook

July 29, 2014 by

US consumer confidence improved this month, and this allowed the dollar to gain on the euro and ignore other recent poor data. The Federal Reserve started its two-day policy meeting today and will announce its decision tomorrow. Market participants expect the Fed to continue stimulus reduction and are also pricing in an interest rate hike in a relatively near future, meaning that the monetary policy outlook is also supporting for the US currency.

S&P/Case-Shiller home price index rose 9.3% in May, year-on-year, slower than was forecast (9.8%). The May’s growth was also below the April’s 10.8%. Month-on-month, the index grew 1.1%. (Event A on the chart.)

Consumer confidence climbed from 86.4 in June (revised up from 85.2) to 90.9 in July, while analysts expected it to fall to 85.5. (Event B on the chart)

On Friday (July 25), a report on durable goods orders was released, showing an increase by 0.7% in July. This is compared to the consensus forecast of 0.4% and the previous month’s -0.9% change. (Not shown on the chart)

Yesterday, a report on pending home sales was released, demonstrating a drop by 1.1% in June. The reading was worse than the expected decrease by 0.2% and the May increase of 6.0%. (Not shown on the chart)

EUR/USD for 2014-07-30

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