Dollar Advances to Three-Month High as Housing Beats Estimates

New York - The dollar rose to a three-month high against the currencies of major U.S. trading partners after an industry report showed sales of existing homes increased last month more than economists estimated.

“People are more willing to buy the dollar on stronger data and punish it a bit when the data disappoints,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies including the euro, yen, pound and franc, increased 0.2 percent to 78.199 at 10:31 a.m. in New York, from 78.037 yesterday. It reached 78.270, the highest level since Sept. 4.

Purchases of existing homes in the U.S. increased 7.4 percent in November to a 6.54 million annual rate, the highest since February 2007, the National Association of Realtors said. The median estimate of 69 economists in a Bloomberg survey was for a 2.5 percent increase to a 6.25 million annual rate.

“Existing homes are being reoccupied very quickly,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “Our top trade for 2010 is to go long the Dollar Index.”

The dollar earlier slid as the Commerce Department reported a 2.2 percent increase in gross domestic product from July through September, compared with a 2.8 percent gain that was previously reported.