The U.S. dollar strengthened against its major rivals in European deals on Friday, as consumer prices rose in line with expectations in June, while the housing starts and building permits increased notably in the same month, backing hopes for a Fed rate hike later this year.
The Labor Department released a report showing that consumer price index in the U.S. climbed by 0.3 percent in June following a 0.4 percent increase in May. The continued increase in prices matched economist estimates.
Excluding food and energy prices, core consumer prices still rose by 0.2 percent in June after inching up by 0.1 percent in the previous month. The uptick in core prices also came in line with expectations.
The Commerce Department report showed significant increases in both housing starts and building permits in the month of June.
The report said housing starts jumped 9.8 percent to an annual rate of 1.174 million in June from the revised May estimate of 1.069 million.
Building permits, an indicator of future housing demand, also surged up 7.4 percent to an annual rate of 1.343 million in June from the revised May rate of 1.125 million.
In her testimony before the Senate Banking Committee on Thursday, the Fed Chair Janet Yellen backed the view of raising rates later this year, if the economy shows sustained recovery.
Prospectus of the Federal Reserve’s rate lift-off, as well as falling weekly jobless claims supported the currency on Thursday. The greenback appreciated 0.65 percent against the euro, 0.19 percent against the pound, 0.32 percent against the yen and 0.59 percent against the franc for the day.
In the Asian session, the greenback held steady against the franc and euro, but fell against the pound. Against the yen, the dollar firmed.
In European deals, the greenback rose to 124.16 against the yen, thus heading to pierce its Asian session’s new 3-month high of 124.22. The greenback may possibly face resistance around the 125.00 zone.
The greenback spiked up to 0.9602 against the Swiss franc, a level not seen since April 23. This is up by 0.3 percent from Thursday’s closing value of 0.9571. On the upside, 0.97 is possibly seen as the greenback’s next resistance level.
The greenback was trading higher at 1.5569 against the pound, off early 2-day low of 1.5672. Continuation of the greenback’s uptrend may lead it to resistance surrounding the 1.55 mark. The pair was trading at 1.5603 at yesterday’s close.
Bank of England Governor Mark Carney said that the interest rate hike decision will become clearer around the turn of the year.
“The decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year,” he said in a speech in Lincoln Cathedral late Thursday.
The greenback, having fallen to 1.0906 against the euro at 3:30 am ET, edged up to 1.0859. Next key resistance for the greenback may be located around the 1.08 region.
The figures from Eurostat showed that Eurozone construction output increased in May after falling in the previous month.
Construction output climbed 0.3 percent month-over-month in May, reversing a 0.2 percent decrease in April, which was revised from a 0.3 percent hike reported earlier.
The greenback strengthened to 1.3006 against the Canadian dollar, its strongest since March 2009. Extension of the greenback’s uptrend may help it challenge resistance around the 1.315 mark. The pair ended Thursday’s deals at 1.2956.
The greenback recovered to 0.6526 against the NZ dollar, from an early low of 0.6555. Against the aussie, the greenback reached as high as 0.7376. The greenback is seen finding resistance around 0.64 versus the kiwi and 0.72 against the aussie. The greenback was quoted at 0.6507 against the kiwi and 0.7401 against the aussie when it finished yesterday’s trading.
Looking ahead, the University of Michigan is due to release preliminary consumer sentiment index for July at 10:00 am ET.
The material has been provided by InstaForex Company – www.instaforex.com