The US dollar traded near its highest point in almost nine years against the major currencies amid a string of upbeat US economic reports sparking further optimism over the strength of the country's recovery, said the National Bank of Kuwait in a report issued Sunday.
"That combined with a lack of figures from other major economies due to the holidays helped support the dollar higher further," reads the report.
It stated that the Euro opened the week at 1.2219 and surged to a high of 1.2272. However, the up move in the single currency quickly reversed as positive US GDP data fuelled investors to buy the greenback. The Euro dropped to a low of 1.2164 and closed the week at 1.2175.
Meanwhile, the Sterling dropped across the board last week, hitting its lowest level since September-2013 after a series of weak economic data that pushed investors to sell the currency. The pound opened the week at 1.5624 and dropped dramatically as data showed that the country's current account deficit widened. The currency reached a low of 1.5484 and closed the week at 1.5554.
Incentive to buy the Japanese Yen has been declining in recent weeks, as investors are taking note of the significant improvements in the US economy which is driving up the appeal of the US dollar.
With regard to the US real estate market, the report noted that the purchases of new US homes unexpectedly declined in November to a four-month low, underscoring a lack of momentum this year in residential real estate. Sales dropped 1.6 percent to a 438,000 annualized pace last month following a 445,000 rate in October that was weaker than previously estimated.
Furthermore, the data also showed an unexpected decline in the orders for US durable goods in November as corporate investment stagnated and demand weakened for military equipment.
Bookings for goods meant to last at least three years decreased 0.7 percent, the third decline in four months. Meanwhile, economists expected a 3 percent increase in October.
The US gross domestic product, the broadest measure of goods and services produced across the economy, grew at a seasonally adjusted annual rate of 5.0 percent in the third quarter, the fastest pace in 11 years, according to the Commerce Department's third and final estimate Tuesday.
The final revision surpassed economists' initial expectations for the economy to grow at a 4.3 percent annual pace. The upward revision compared with a first estimate of 3.5 percent in October and a second estimate of 3.9 percent last month. GDP increased 4.6 percent in the second quarter, after decreasing 2.1 percent in the first.
Consumer spending exceeded expectations in November as incomes increased and gasoline prices dropped, indicating the biggest part of the US economy is strengthening as the year ends. Household purchases climbed 0.6 percent, the most in three months, after a 0.3 percent October gain that was larger than previously estimated.
The NBK stated that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, highlighting the economy's sustained strength.
Initial claims dropped 9,000 to a seasonally adjusted 280,000 for the week ended Dec. 20. It was the lowest reading since Nov. 1 and marked the fourth straight week of declines.