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US Dollar Index Falls Slightly on Contrasting Data and FOMC Views

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Sep. 29 2015, Published 2:43 p.m. ET

Contrasting data drive US dollar index

The US dollar index took a positive bias as month-over-month personal spending beat the August forecasts. According to the Bureau of Economic Analysis release on September 28, 2015, month-over-month personal spending grew by 0.4%, while personal income increased by 0.3%.

The increase in personal income was slightly lower than in July, with the fall in non-farm proprietors’ income being the major negative driver. The positive personal spending number was greeted by the markets as the US dollar index reached the high of the day, 96.49, after the release.

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In contrast to the positive personal spending data, the pending home sales data released later in the day by the National Association of Realtors was on a negative note. After this release, the US dollar index fell from the day’s highs. The pending home sales for August, a leading indicator of housing activity, fell by 1.4%.

Contrasting views of FOMC members

The week starting September 28, 2015, is filled with scheduled appearances by FOMC members, which could have a major influence on the market, especially on days with fewer economic data releases.

On Monday, the FOMC members gave contrasting views. John Williams of the San Francisco Federal Reserve and William Dudley of the New York Federal Reserve shared their views of a potential rate hike this year and commented that they expect the October FOMC session to be a live one. On the other hand, Charles Evans of the Chicago Fed believed that the rate hike could be delayed until mid-2016. The US dollar index closed at 95.93 levels.

Impact on the market

The iShares US Home Construction ETF (ITB) and the SPDR S&P Homebuilders ETF (XHB) traded with a negative bias, as the pending home sales fell below forecasts. ITB fell by 4.37% and XHB fell by 3.94% on September 28, 2015.

Housing stocks also experienced heavy selling pressure. KB Home (KBH) and Mohawk Industries (MHK) fell by 7.99% and 6.25%, respectively. Sherwin-Williams Company (SHW) also followed this negative trend and fell by 3.05%.

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