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EUR/USD Falls on Rising Home Prices and Consumer Confidence

August 31, 2010 by

EUR/USD currency pair was rising this trading session but began to decline after reports showed that home prices and consumer confidence increased more than expected. The dollar weakened previously as a report showed that US personal income rose less than analysts estimated. EUR/USD is currently trading near 1.2668.

S&P/Case-Shiller home price index increased at a seasonally adjusted rate of 4.2% in June. In the monthly perspective it rose from from 147.4 to 147.81.

Chicago PMI fell to 56.7 in August from a reading of 62.3 in the previous month. It frustrated analysts, who expected a value of 57.3.

Consumer confidence index improved in August, rising to 53.5 from 51.0 in July. The reading positively surprised traders, who expected a decline to 50.7.

The minutes of the FOMC meeting was released today. Committee members expected the inflation to stabilize, but agreed that “the economic outlook had softened somewhat more than they had anticipated, particularly for the near term”. Some member expressed concerns about “downside risks to the outlook for both growth and inflation” and that “any further adverse shocks could have disproportionate effects, resulting in a significant slowing in growth going forward”.

While no member saw an appreciable risk of deflation, some judged that the risk of further near-term disinflation had increased somewhat. More broadly, members generally saw both employment and inflation as likely to fall short of levels consistent with the dual mandate for longer than had been anticipated.

A report about personal income and spending in the US was released yesterday. Personal income rose 0.2% and personal spending grew 0.4%.

If you have any comments on the recent EUR/USD action, please, reply using the form below.

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