The dollar strengthened against the euro after a report showed confidence among U.S. homebuilders reached the highest level in seven months, bolstering the case for an accelerating U.S. economy.
The pound rose the most in one month versus the dollar after Bank of England Governor Mark Carney said officials may raise borrowing costs before wages increase. The ruble strengthened after Russia made the currency’s trading range more flexible. A dollar measure reached a two-week low against its major counterparts earlier before a report forecast to show U.S. inflation slowed and as Federal Reserve Chair Janet Yellen and central bankers prepare to meet at an annual conference in Jackson Hole, Wyoming.
“The housing number was a positive surprise, that certainly helped to give a little boost to the dollar,” Eric Viloria, a strategist at Wells Fargo & Co. in New York, said in a phone interview. “Yellen has been the more dovish member of the Fed. She’ll look to strengthen the view that a high degree of accommodation is appropriate” in Jackson Hole, he said.
The dollar climbed 0.3 percent to $1.3364 per euro at 5 p.m. New York time. The U.S. currency gained 0.2 percent to 102.57 yen. The Japanese currency rose 0.1 percent to 137.07 per euro.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, added 0.1 percent to 1,020.21, after falling to 1,018.70, the lowest level since Aug. 1.
The pound rose before the BOE releases minutes on Aug. 20 of its Aug. 6-7 meeting, when the Monetary Policy Committee kept its benchmark rate at 0.5 percent.
“We have to have the confidence that prospective real wages are going to be growing sustainably” before raising interest rates, Carney said in comments published by the Sunday Times yesterday. “We don’t have to wait for the fact of that turn to raise them.”
Sterling appreciated 0.2 percent to $1.6728, reaching the biggest gain since July 15.
Russia widened the band in which the ruble trades against the target basket of dollars and euros to 9 rubles from 7 rubles, the central bank in Moscow said in a statement on its website.
The ruble gained 0.3 percent against the basket to 41.5198.
Israel’s shekel depreciated to the weakest level in five months after data showed the economic expansion slowed in the second quarter. Gross domestic product grew 1.7 percent, compared with a revised rate of 2.8 percent in the first three months of the year.
The shekel lost 0.8 percent to 3.5140 per dollar, after reaching the weakest since Feb. 27.
The National Association of Home Builders/Wells Fargo sentiment measure climbed to 55 in August from 53 in July, the Washington-based group reported. Readings above 50 mean more respondents said conditions were good. The median forecast in a Bloomberg survey of economists projected it would hold at 53.
“The number gives you the sense that housing market recovery is taking shape,” said Alan Ruskin, global head of Deutsche Bank AG’s Group of 10 foreign exchange in New York. “That’s obviously promising” and contributes to a stronger dollar, he said.
U.S. consumer prices increased 2 percent in July from a year ago versus 2.1 percent the previous month, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department data tomorrow.
The Fed reduced monthly bond purchases by $10 billion for sixth consecutive meeting last month to $25 billion. The central bank has kept the benchmark interest rate at a record zero to 0.25 percent since December 2008.
“If annual inflation rises around consensus at 2 percent, it justifies the Fed retaining a low interest-rate policy,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services. “That’ll keep U.S. yields depressed and put a lid on dollar strength. It’s hard to see Yellen taking a hawkish tone in Jackson Hole.”
Benchmark U.S. 10-year Treasury note yields slid to as low as 2.30 percent on Aug. 15, the least since June 2013.
Yellen is scheduled to deliver a speech titled “Labor Markets” at the Jackson Hole symposium. The three-day meeting of central bankers and economists begins Aug. 21 with a topic of “Re-evaluating Labor Market Dynamics.” European Central Bank President Mario Draghi is among the speakers.
“The key is Jackson Hole this week, we’re looking, on balance, for a dovish view from Yellen,” Mike Moran, a senior currency strategist at Standard Chartered in New York, said by phone. “That’s not particularly good for the dollar, on a broad term basis.”