U.S. dollar weakens as mortgage rates rise and builder confidence declines, gold rises amidst dollar’s fall

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19th September 2023 – (New York) In late trading on Monday, the U.S. dollar experienced losses as mortgage rates continued to remain high above 7 per cent, and builder confidence took a hit in September.

The dollar index, which gauges the performance of the greenback against six major currencies, decreased by 0.11 per cent, reaching 105.2014 in late trading.

According to the National Association of Home Builders/Wells Fargo Housing Market Index released on Monday, builder sentiment dropped below the critical threshold of 50, falling to 45 for the first time in five months.

Alicia Huey, Chairman of NAHB, noted that the decline in builder sentiment over the past two months coincided with the surge in mortgage rates above 7 per cent, which significantly impacted buyer purchasing power.

All eyes are now on the Federal Reserve’s monetary policy decision scheduled for Wednesday. The market anticipates that the Fed will maintain short-term interest rates at their current level during the upcoming announcement. Opinions on whether there will be another rate hike later this year are divided.

In late New York trading, the euro saw an increase, rising to 1.0679 U.S. dollars from 1.0660 dollars in the previous session. However, the British pound decreased slightly, reaching 1.2376 U.S. dollars from 1.2384 dollars.

The U.S. dollar traded at 147.7270 Japanese yen, slightly lower than the previous session’s 147.8570 Japanese yen. Against the Swiss franc, the U.S. dollar strengthened to 0.8978 from 0.8972 Swiss francs, but it declined against the Canadian dollar to 1.3496 from 1.3516 Canadian dollars. Similarly, the U.S. dollar weakened against the Swedish krona, falling to 11.1694 from 11.1821 Swedish krona.

Meanwhile, gold futures on the COMEX division of the New York Mercantile Exchange experienced an increase as the U.S. dollar lost ground.

The most active gold contract for December delivery rose by 7.20 U.S. dollars, or 0.37 per cent, closing at 1,953.40 dollars per ounce.

Gold remains trapped within a narrow trading range as investors eagerly await the outcome of the two-day Federal Open Market Committee meeting, which will conclude on Wednesday with an announcement after the market’s close.

Adding to the economic landscape, the National Association of Home Builders/Wells Fargo Housing Market Index reported a decline in U.S. builder confidence for newly constructed single-family homes, dropping by five points to 45 in September following a six-point decrease in August.

In other precious metal news, silver for December delivery rose by 11.20 cents, or 0.48 per cent, closing at 23.498 dollars per ounce, while platinum for October delivery increased by 8.80 dollars, or 0.95 per cent, closing at 938.30 dollars per ounce.