Dollar Modestly Weaker Despite Positive Housing News
The dollar was weaker on Tuesday, slipping to its lowest in more than two months versus its Canadian counterpart amid expectations of an interest rate hike north of the border.
There was little movement versus other major rivals, despite a second consecutive encouraging report on the U.S. housing market.
Meanwhile, European officials prepared to meet in Brussels Thursday, where they will look to provide additional funding for debt-ridden Greece
The dollar dropped to more than five cents below parity against the loonie, its lowest since May 2. A move below C$0.9445 would take the dollar to its lowest since 2007.
The Bank of Canada left its benchmark interest rate at one percent Tuesday morning, as expected, but signaled they will tighten policy at their next scheduled meeting, in September
Instead of repeating a vague pledge to “eventually” tighten policy, Carney said this morning that monetary stimulus “will be withdrawn.”
The dollar slipped to a 5-day low of Y78.82 versus the yen, and eased to $1.4170 versus the euro.’
In a sign that the beleaguered U.S. housing sector may be on the rebound, new residential construction showed an unexpectedly large jump in June, according to figures released by the Commerce Department on Tuesday.
The report showed that housing starts rose by 14.6 percent in June to a seasonally adjusted annual rate of 629,000, well above the revised May figure of 549,000.
Confidence among German investors tumbled for the fifth consecutive month in July as worries over a possible Greek default and a lack of consensus among U.S. policymakers over raising the debt ceiling turned financial market experts more pessimistic over the economy’s growth prospects.
Survey results from the Mannheim-based ZEW Centre for European Economic Research showed Tuesday that the economic sentiment index dropped more than expected to minus 15.1, its lowest level since January 2009, from minus 9 in June. Economists had expected the index to fall to minus 12.5.
