Yahoo Finance Dollar Flat on Weak U.S. Housing Data
Investing.com – The dollar was unchanged against its rivals Wednesday as gains on the back of a slump in the pound were offset by soft U.S. economic data showing subdued housing market activity.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.04% to 94.77, down from a session high of 95.18.
Housing starts slumped to a nine-month low as both higher mortgage rates and elevated costs for labor and materials weighed on the housing market, government figures showed Wednesday.
Housing starts tumbled 12.3% to a seasonally adjusted annual rate of 1.173 million units last month, the Commerce Department said.
The report also highlighted a 2.2% decline in building permits to a rate of 1.273 million units. That was the lowest level since September 2017.
Analysts, however, claimed the duo of weaker reports did not signal that the housing recovery had "shorted out."
"While labor also remains in short supply and pricey, we believe the greatest impediment to homebuilding right now is that fewer projects pencil out. That said, the housing recovery has not shorted out," Wells Fargo said.
Market participants were also monitoring Fed Chairman Jay Powell's testimony before the House Financial Services Committee Wednesday. Reaction in currencies was muted as Powell offered little new insight on monetary policy.
A slump in the pound to September lows limited dollar weakness as weaker U.K. inflation data dented expectations for a Bank of England rate hike despite calls from analysts insisting that inflation was strong enough to support an August rate hike.
U.K. inflation data likely won't deter the Bank of England from raising the interest rates in August, ING said. But a further fall in core inflation will make a second rate hike in 2018 unlikely, ING warned.
GBP/USD fell 0.34% to $1.3064, but remained above its session low of $1.3011.
The greenback also gave up gains against safe-haven currencies such as the yen and Swiss franc after China’s Ministry of Commerce warned of further countermeasures in response to U.S. steel and aluminum tariffs.
USD/JPY fell 0.11% to Y112.77, while USD/CHF fell 0.17% to 0.9984.
EUR/USD fell 0.02% to $1.1658 and USD/CAD fell 0.08% to C$1.3182.
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