The dollar is trading higher against both the Japanese Yen and the British pound Tuesday and has recovered most of its early losses against the Euro. For the second day in a row, investors were treated to stronger than expected U.S. housing data. Homebuilder confidence logged an unexpected increase yesterday and housing starts exceeded expectations this morning.
Housing starts in the U.S. rose more than expected in the month of September, according to a report released by the Commerce Department on Tuesday.
The report said housing starts climbed 6.5 percent to an annual rate of 1.206 million in September from the revised August estimate of 1.132 million. Economists had expected housing starts to rise to a rate of 1.147 million.
Meanwhile, building permits tumbled 5.0 percent to an annual rate of 1.103 million in September from 1.161 million in August. Building permits, an indicator of future housing demand, had been expected to come in unchanged compared to the 1.170 million originally reported for the previous month.
Lending conditions for businesses eased further in the third quarter, while those for house purchases tightened, results of a survey by the European Central Bank showed Tuesday.
Credit conditions on consumer credit and other lending to households also eased in the third quarter, the ECB’s quarterly Bank Lending Survey revealed. Competition was the main driver of banks’ easing of credit standards for loans to enterprises, the survey said.
The dollar dropped to an early low of $1.1387 against the Euro Tuesday, but has since bounced back to around $1.1340.
Eurozone’s current account surplus decreased sharply in August, figures from the European Central Bank showed Tuesday. The current accounts surplus declined to an unadjusted EUR 17.7 billion from EUR 25.6 billion in July. A year ago, the surplus was EUR 17.4 billion.
Germany’s producer prices declined at the fastest pace in seven months and the fall was much worse than the decrease economists had predicted, preliminary data from Destatis revealed Tuesday. The industrial producer price index dropped 2.1 percent year-on-year following a 1.7 percent slump in August. Economists had expected a 1.8 percent fall.
The leading index for France, which measures the future economic activity, increased at a stable pace in August, survey figures from the Conference Board showed Monday. The Conference Board leading economic index climbed 0.4 percent in August, the same rate of increase as in July. In June, the index had risen 0.3 percent.
The Bank of England should consider to begin interest rate hikes now if it wants to proceed with the tightening cycle only gradually to reduce the impact on households and businesses, policymaker Ian McCafferty said on Tuesday.
“If we on the MPC are to achieve our ambition of raising rates only gradually, so as to minimize the disruption to households and businesses of a normalization of policy after a long period in which interest rates have been at historic lows, we need to avoid getting ‘behind the curve’ with respect to the neutral rate,” McCafferty said in a speech delivered at the Bloomberg headquarters in London.
“And for me, that provides an additional justification not to leave the start date for lift off too late.”
The policymaker is the only member of the BoE Monetary Policy Committee seeking a rate hike. He has sought a quarter-point rate increase since August.
Meanwhile, other policymakers including Governor Mark Carney have signaled that it is time to think of raising rates, they are apparently not in a hurry amid the persistently low inflation.
The buck hovered around the $1.5480 level against the pound sterling early Tuesday, but has since risen to around $1.5445.
The greenback has climbed to a 1-week high of Y119.880 against the Japanese Yen, from around Y119.400 this morning.
The material has been provided by InstaForex Company – www.instaforex.com