Dollar Support Holds Despite Weak Data

The dollar pared earlier against the yen and the euro as a delayed reaction to a government report showed October’s US housing starts fell to a 6-year low. The dollar was marginally lower on the housing release only to get hit hard about 30 minutes later as rumors of hedge funds trouble hit the FX market. The yen advanced as US Treasury Deputy Secretary Robert Kimmitt said he will ask China to allow the yuan to be more freely traded. The dollar is still in a tight trading range against most major currencies. The EUR/USD looks weak despite today’s rise as the pair still has not broken resistance but broken its short-term uptrend.

Financial and Economic News and Comments

US & Canada
• October’s US housing starts fell a more-than-expected 14.6% to 1.486m units, the US Commerce Department reported. Housing permits dropped 6.3% to 1.535m units, a record ninth straight decline and the lowest since December 1997.

• The RBC cash index shows US consumer confidence rose from 83.1 in October to 92.4 in November.

• US crude fell to 55.64 as of 1:10 PM EST, its lowest point since June 2005 and below important support at $57 on high fuel stocks in the US, forecasts for a warmer than average winter and doubt over OPEC output cuts.

• While Federal Reserve Bank of Dallas President Richard Fisher said the dollar is likely to remain the world's top currency in central bank reserves because of US growth rates and success in containing inflation, United Arab Emirates Central Bank Governor Sultan Bin Nasser al-Suwaidi said the euro will overtake the dollar by 2015.

Europe
• The Eurozone's seasonally adjusted trade deficit narrowed sharply in September to €900m owing to a dip in imports, the Eurostat said

• France’s Q3 employment rose 0.1% q/q, 0.9%y/y, the French statistics office Insee said. Employment stood at 15.611m at the end of Q3.

• France's current account deficit in September narrowed to €2.069b m/m but grew larger y/y, the French Finance Ministry said.

Asia-Pacific
• October’s Japanese department store sales dropped 1.9% y/y at ¥635.2b, the Japan Department Stores Association said.

• China's property index rose 2.38 points y/y, 0.26 points m/m in October to 103.4, the Chinese National Bureau of Statistics (NBS) said.