U.S. Dollar Declines After Sharp Plunge In Housing Starts

Date : 04/18/2017 @ 6:28AM
Source : RTTF2

U.S. Dollar Declines After Sharp Plunge In Housing Starts

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The U.S. dollar declined against its major counterparts in the early New York session on Tuesday, as U.S. housing starts plunged more than expected in March, adding to recent run of disappointing data that indicates a slowdown in economy.

Data from the Commerce Department showed that the housing starts plunged by 6.8 percent to an annual rate of 1.215 million in March from an upwardly revised 1.303 million in February.

Economists had expected housing starts to drop by 2 percent to a rate of 1.262 million from the 1.288 million originally reported for the previous month.

The U.S. treasury yields also declined, with the benchmark yield on 10-year note falling 2.21 percent, while that of 2-year equivalent was down by 1.18 percent. Yields move inversely to bond prices.

Meanwhile, the Commerce Department said building permits, an indicator of future housing demand, jumped by 3.6 percent to a rate of 1.260 million in March from a revised 1.216 million in February.

Building permits had been expected to climb by 3.1 percent to a rate of 1.250 million from the 1.213 million that had been reported for the previous month.

Investors also focus on economic dialogue between the U.S. and Japan aimed to boost bilateral trade agreement, after the Trump administration scraped the 12-nation Trans-Pacific Partnership trade pact as part of protectionist policy.

The U.S. Vice-President Mike Pence is in Japan to negotiate free trade agreement that would result in opening doors for U.S. goods in Japanese markets.

The currency has been trading in a negative territory in the European session.

The greenback declined to 0.9989 against the Swiss franc, a level unseen since March 30. The next possible support for the greenback-franc pair is seen around the 0.985 region.

The greenback fell to near a 3-week low of 1.0700 against the euro, from a high of 1.0637 hit at 8:00 pm ET. Continuation of the greenback's downtrend may see it challenging support around the 1.08 mark.

The International Monetary Fund Managing Director Christine Lagarde said that France's presidential election is adding to the existing political uncertainty worldwide as it raises several questions on the future of the euro area.

There is an uncertainty and growing concern about the outcome of the French election, Lagarde said in an interview to a group of European reporters.

The greenback retreated to 108.65 against the Japanese yen, from a 4-day high of 109.22 set at 8:00 pm ET. The greenback is seen finding support around the 106.00 level.

S&P Global Ratings maintained the sovereign rating of Japan at 'A+' with 'stable' outlook.

The rating agency said the economy's strong external position, prosperous and diversified economy, political stability, and stable financial system balance its very weak public finances.

The greenback dropped to a 4-1/2-month low of 1.2757 against the Sterling, off its early 4-day high of 1.2515. Further weakness may take the greenback to a support around the 1.30 area.

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