The dollar rose the most against the euro this month as new-homes sales unexpectedly rose last month, boosting speculation Federal Reserve Chair Janet Yellen will reiterate the central bank’s plan to continue to cut bond-buying when she testifies before a Senate panel tomorrow.
The U.S. currency strengthened versus most of its 16 major peers as the housing reports comes at a time when a harsh winter has weighed on economic-growth early this year. South Africa’s rand fell from a six-week high after Finance Minister Pravin Gordhan lowered the economic growth outlook. China’s yuan pared losses after reaching the weakest level since July as the People’s Bank of China cut the reference rate.
“The dollar’s going to be more sensitive to upside surprises than downside, the risk reward is for the dollar to rally,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “The underlying growth in the U.S. is still there. The slowdown in data is just temporary.”