The US dollar halted a three-session slide as solid US new home sales data and developments in US government bond markets helped dig it out of its biggest hole in a month against its main peers. US stocks stepped back from record highs, spurring some safety demand for the dollar, while the fastest rate of new home sales in five years in June highlighted the outperformance of the world’s top economy, pushing up Treasury yields, making the dollar a more attractive bet. This has helped the US dollar push back against a rising euro, with the single currency buoyed by forecast-beating PMI surveys. The euro may continue its trend higher should important German IFO survey meet expectations. The pound found support from UK industrial numbers in front of key British Q2 GDP data while the New Zealand dollar rallied after the country’s central bank said its next move will be a rate hike in the future.

Sterling

Sterling got a data lift and held near one-month peaks against America’s dollar. A survey from CBI showed that a gauge of industrial activity rose to the highest levels since December. The better-than-expected data tempered expectations for more monetary easing by the Bank of England any time soon.

US dollar

The US dollar held near one-month lows as the cloudy outlook for Fed policy prompted investors to pull more profits off the table following its rise weeks ago to three-year highs. Still, expectations of a Fed taper this year should limit its downside and US new home sales supported that view. Markets will analyse US data on weekly unemployment claims and durable goods orders and a positive outcome would bode constructively for Fed taper plans and buoy the dollar.

Japan yen

The yen lost ground to its rivals as improved risk tolerance damped demand for the safety trade. Investors took comfort from tentative signs of recovery in Europe which overshadowed China’s lousiest manufacturing report in 11 months in July.

Euro

Flickering signs of life in the 17-member economy in Europe helped the single currency rise to new one-month peaks against the greenback. Still, the dovish stance of the European Central Bank would little limit the euro’s upward trajectory. A day after consumer optimism in the eurozone climbed to August 2011 highs in July, an initial survey of manufacturing, signalled growth for this month, from a contraction in June.

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