The dollar remained pressured to the downside against its peers today following the release of discouraging US housing data reducing demand for the greenback. US building permits dropped 7.7% to total 1.086 million units in March following a 2.2% decline to 1.177 million units in February, while experts forecast an increase to 1.200 billion. US housing starts dropped 8.8% in March to total 1.089 million units following a 6.9% rise to 1.194 million units in February, while experts forecast a total of 1.170 million. New York Federal Reserve President William Dudley cautioned yesterday that the Fed will in all likelihood remain vigilant in its approach to rate hikes, which raised doubt as to when the next hike is likely to occur. The US dollar index was down 0.39%, trading at 94.08, marking its lowest level since April 13.
The euro strengthened against the dollar with the pair up 0.57%, trading at 1.1378 off its session high of 1.1384 after having come off its session low of 1.1303 reached earlier in the day. Data revealed that the ZEW economic sentiment index for Germany climbed to a reading of 11.2 in April from a reading of 4.3 in March, surpassing analysts’ expectations for 8.0. The data helped push the euro to higher ground against the weaker dollar, as poor US economic data reinforced views that the Federal Reserve will remain dovish.
The pound strengthened against the dollar with the pair up 0.89%, trading at 1.4405 off its session high of 1.4418 after having come off its session low of 1.4269 reached earlier in the day. The pound is extending its great start to the week, with the catalyst appearing to be improved risk sentiment amongst investors on the back of solid German data. The pound’s move was underpinned by a rally in stocks, with no local significant domestic data releases as Germany’s DAX surged over 200 points.
The yen weakened against the dollar with the pair up 0.23%, trading at 109.06 off its session high of 109.48 after having come off its session low of 108.74 reached earlier in the day. Outlook on the yen became vulnerable on the back of remarks from Japanese Finance Minister Taro Aso which highlighted his readiness to address disproportionate currency moves and that fast moves are undesirable. The Bank of Japan’s preparedness to intervene to weaken the yen has already been met with some opposition. The yen was also pushed lower as its safe haven appeal diminished as investors took on riskier assets.
The Australian, New Zealand and Canadian dollars strengthened against the greenback as commodity associated currencies were boosted by a rise in oil prices, after a workers’ strike in Kuwait slashed the country’s output by roughly half. Oil prices had plummeted the previous day after no agreement was reached amongst the world’s major oil producers to freeze output which would push prices higher. US crude was last up 3.06%, trading at $42.45 per barrel.
The Aussie was up 0.88% against the dollar, with the pair trading at 0.7817 off its session high of 0.7820 after having come off its session low of 0.7746 reached earlier in the day. The kiwi dollar surged 1.34% against the greenback, with the pair trading at 0.7042 off its session high of 0.7054 after having come off its session low of 0.6947 reached earlier in the day. Policy meeting minutes released by the Reserve Bank of Australia revealed that the central bank is not in a rush to lower interest rates, adding that employment data will remain closely monitored and that the strength of the Aussie dollar could be problematic for non-mining sectors of its economy. The loonie rallied 1.13% against the dollar, with the pair trading at 1.2641 off its session low of 1.2630 after having come off its session high of 1.2795 reached earlier in the day. The loonie rose to 10-month highs against the dollar.
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