Greenback weaker on data

Story link: Greenback weaker on data

The US dollar was weaker in relation to the euro Tuesday as sentiment improved in Germany and demand for the greenback as a safe investment declined after housing starts were reported higher in the US in May.

The ZEW index of investor and analyst expectations stood at 44.8 this month, showing that German sentiment has risen to its highest level in three years.

Meanwhile, the US Commerce Department said that US housing starts were up 17.2 percent overall in May, with starts on single-family homes up 7.5 percent while multi-family unit starts were 61.7 percent higher after a drop of 49.4 percent in April.

The biggest gains were in the West, with a gain of 28.6 percent, but building activity remains 45.2 percent lower than it was in May 2008.

In addition to the jump in construction starts, applications for new building permits were up 4 percent in the US in May.

At nearly 10:30 a.m. in New York, the dollar traded at $1.3856 to the euro.

Both the pound and the Japanese yen also gained on the US dollar during the early session.

The greenback was hurt by reports that the leaders of Brazil, Russia, India and China were reported to be ready to talk about reducing their dependence on the US currency, while the yen saw gains after the Bank of Japan left interest rates at 0.1 percent and issued a positive evaluation of Japan’s economy and the pound advanced on the possibility that the Bank of England will raise interest rates after UK inflation did not slow as much as had been anticipated in May.

The UK’s Office of National Statistics reported that consumer prices rose at an annual rate of 2.2 percent in May.

In mid-morning trade in New York, the pound traded at 84.54p to the euro while it took $1.6391 to buy a pound as the dollar took back some of its earlier decline against the UK currency.

The yen, meanwhile, traded at ¥96.81 to the US dollar and at ¥134.1416 to the euro.