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Dollar Edges Higher on Bullish Housing Data

By Yasin Ebrahim – The dollar edged higher against its rivals Wednesday, as bullish housing data strengthened expectations that the U.S. economy will remain on solid footing.By

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.06% 97.58.

The National Association of Realtors said pending home sales rose 3.6% to a 5.54 million annual rate. That was the strongest pace of growth since February 2018.

Lawrence Yun, chief economist at the National Association of Realtors, attributed the higher level of housing activity to strong job creation, high consumer confidence and low mortgage rates.

A sharp uptick in the pound, meanwhile, kept the dollar on the backfoot as positive U.K. economy data cooled expectations that the Bank of England will cut rates at the end of the month.

GBP/USD rose 0.59% to $1.312.

But some analysts see limited upside for cable, arguing that seasonal factors will likely weigh on the sterling.

"There is little evidence so far of a broad based rebound in sentiment following the general election plus seasonal factors tend to weigh on GBP through February and March," Bank of America said.

With just a day ago until the European Central Bank meeting, the euro was largely flat against the dollar at $1.109.

USD/CAD rose 0.62% to C$1.315 after the Bank of Canada kept its benchmark rate on hold, but left the door open to a future rate cut, saying that it will monitor data to gauge whether the recent slowdown in domestic growth has accelerated.

"Today's statement makes us more comfortable with our call for a rate cut in April, and market odds of a move by mid-year are now slightly above 50%," RBC said

The loonie was also knocked by a fall in oil prices after the International Energy Agency warned of a surplus in oil supplies by 1 million barrels per day in the first half of this year.

USD/JPY was flat at Y109.87 on subdued safe-haven demand despite reports that the death toll from the Coronavirus had increased to 17, raising fears of contagion.

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