Dollar Falls to Lowest Level Since June as Housing Starts Slumpby
Cooling economic data may restrain Fed interest-rate increases
Greenback index declines for a third stright day on report
The dollar reached a 10-month low Tuesday after a government report showed new-home construction in the U.S. slipped more than projected in March, clouding Federal Reserve plans to boost interest rates.
The U.S. currency weakened against most of its major peers in New York as the central bank is scrutinizing data to measure whether the economy is meeting its goals of full employment and a 2 percent inflation rate. The yen had also declined as oil and stocks rallied, damping haven demand.
“This result should take some steam out of the positive surprises that markets have gotten out of U.S. data of late and help keep the dollar on the defensive,” Bipan Rai, executive director of foreign exchange at Canadian Imperial Bank of Commerce in Toronto, wrote in an e-mail.
After years of strength, the dollar has declined against all except two of its 16 peers this year as markets continue to pare back expectations of when the Fed will tighten monetary policy. The greenback has weakened as policy makers voice increased concern that global headwinds are also a hurdle for the domestic economy.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was little changed as of 7:51 a.m. in Tokyo after falling 0.6 percent Tuesday. The U.S. currency was at $1.1357 against the euro $1.1358. The yen weakened 0.1 percent to 109.26 per dollar.
Housing starts decreased 8.8 percent to a 1.09 million annualized rate that was the lowest since October and weaker than any forecast of economists surveyed by Bloomberg. Permits, a proxy for future construction, also dropped.