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The US dollar rose in value only temporarily on Thursday when durable goods orders increased by 4.2% - exceeding predictions of 1.1%. That said, on Wednesday the US dollar rose in value compared to other major currencies as positive data regarding US new home sales and the US manufacturing industry sector was released. The Markit’s July flash purchasing managers’ index for the United States increased to its highest reading in four months to 53.2. Additionally, new home sales in the US in June rose to 497,000 per annum – a number not seen since May of 2008.
In other words then, home sales were up almost over 40% when compared to the numbers a year ago. A gradual improving economy and low interest rates are believed to contribute to these results. However, as interest rates increased almost a percentage point and there are fewer new homes available to consumers, there is a chance that these results may flatten out or decrease in the coming months. Also, the additional median price for a new home in the US is $249,700 – up 7.4% over the previous year’s levels.
Further, last week, the US dollar decreased in value in part due to disappointing housing numbers. For example, building permits decreased to 0.91 million to 0.99 million while new housing starts to 0.84 million to 0.91 million. Both of these totals fell short of forecasters expectations. Additionally, Ben Bernanke’s testimony to Congress did not offer any substantial new news. He stated that tapering can occur in later 2013 and then stop in 2014, but he made no commitments.
As for the future of the US dollar, the dollar may increase in value when QE or Quantitative Easing tapering is implemented. Of course, Bernanke stated that QE tapering is directly dependant on just how well the US economy is improving.