News Column

Dollar Extends Multi-Month Highs Versus Euro, Sterling

August 19, 2014

WASHINGTON (Alliance News) - The dollar rallied versus European rivals on Tuesday, hitting fresh 9-month highs against the euro after upbeat US housing data.

Housing starts rose 15.7% in July from June to an annual rate of 1.093 million units, the Commerce Department said, marking the highest level of construction since November.

A robust housing sector might compel the Federal Reserve to raise interest rates early next year.

Fed officials will be meeting in Jackson Hole, Wyoming later this week.

Although no monetary policy announcements are forthcoming, speeches from the central bank's annual symposium provide some insight about when the Fed intends to tighten.

The dollar rose to USD1.3310 versus the euro, adding to its strong recent advance.

The buck climbed to its highest since March against the sterling, touching USD1.6610 before leveling off.

UK inflation slowed more than expected in July largely due to a fall in clothing prices and factory gate prices declined unexpectedly from last year, the Office for National Statistics reported.

Inflation eased to 1.6% in July from 1.9% in June, while it was forecast to slow to 1.8%.

Tame inflation gives UK policy makers more room to maintain accommodative monetary policy through this year.

Last week, during the central bank's quarterly inflation report, Carney struck a more dovish tone, saying that the bank remains on course to raise rates early next year but only if wage growth in the UK picks up.

Early gains took the buck to Y102.90 versus the yen, at the upper end of a stubborn trading range.

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Source: Alliance News

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