Dollar Little Changed Ahead Of Data Deluge

My FX Forum

Staff member
The dollar is turning in a mixed performance against its major rivals Wednesday afternoon, but remains little changed overall. Things were relatively quiet on the U.S. economic front this morning, but investors are looking forward to the release of a large batch of data Thursday morning.

Weekly jobless claims, the Philly Fed index, existing home sales and the leading economic indicator are all slated for release tomorrow morning.

A report released by the Commerce Department on Wednesday showed a sharp increase in new residential construction in the U.S. in the month of August, although the report also showed a steep drop in building permits during the month.

The Commerce Department said housing starts spiked by 9.2 percent to an annual rate of 1.282 million in August from the revised July estimate of 1.174 million. Economists had expected housing starts to jump by 5.7 percent to a rate of 1.235 million from the 1.168 million originally reported for the previous month.

Meanwhile, the report said building permits tumbled by 5.7 percent to an annual rate of 1.229 million in August from a revised 1.303 million in July.

Building permits, an indicator of future housing demand, had been expected to edge down by 0.1 percent to a rate of 1.310 million from the 1.311 million originally reported for the previous month.

The dollar dropped to an early low of $1.1714 against the Euro Wednesday, but has since rebounded to around $1.1670.

Eurozone construction output grew at a slower pace in July reflecting contraction in civil engineering, Eurostat reported Wednesday. Construction output rose 0.3 percent month-on-month, slower than the 0.7 percent increase in June. This was the fourth consecutive rise in production.

The euro area current account surplus decreased in July largely due to a fall in visible trade surplus, the European Central Bank reported Wednesday. The current account surplus fell to a seasonally adjusted EUR 21 billion in July from EUR 24 billion in June.

The buck fell to a low of $1.3214 against the pound sterling Wednesday morning, but has since bounced back to around $1.3145.

UK inflation rose unexpectedly in August, squeezing consumers' disposable income even as wages showed signs of recovery.

Consumer price inflation increased to 2.7 percent in August from 2.5 percent in July, the Office for National Statistics reported Wednesday.

A similar higher rate was last seen in February. Economists had forecast inflation to ease to 2.4 percent.

The Bank of Japan maintained its ultra-loose monetary policy at its September meeting after tweaking its stance in July.

The policy board voted 7-2 to purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent, the BoJ said Wednesday.

The board retained the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

The BoJ will conduct purchases of Japanese government bonds in a flexible manner so that the outstanding amount will increase at an annual pace of about JPY 80 trillion.

The greenback reached a high of Y112.446 against the Japanese Yen Wednesday, but has since eased back to around Y112.275.

Japan posted a 444.594 billion yen trade deficit in August, the Ministry of Finance said on Wednesday. That beat forecasts for a shortfall of 483.2 billion yen following the 231.9 billion yen deficit in July.