The dollar strengthened against its peers today on the back of solid US housing starts data at a near 8 year high in July.  US housing starts climbed 0.2% to a yearly rate of 1.21 million units which was its highest level since October 2007.  July posted the 4th consecutive month that housing starts stayed above the 1 million unit mark.  Building permits dropped 16.3% in July following solid advances for 3 months in a row.  This promising US data was released as the market awaited the Federal Reserve’s statement scheduled for tomorrow which investors expect will include a definitive indication as to when a rate increase will take place.  

The euro weakened against the dollar with the pair down 0.36% trading at 1.1034 falling to session lows after coming off its session high of 1.1093.  The euro has posted losses against the greenback for the 4th day in a row.  Volatility in the pair has faded over the last few months despite Greece facing a near exit from the euro zone and the possibility of a rate increase by the Fed in September.    

The pound strengthened against the dollar with the pair reaching a session high of 1.5716 rallying off its low of 1.5561 reached earlier in the day following the release of UK consumer price data revealing a sudden increase in July.  UK consumer price index inched up 0.1% while experts had forecast the index to be unchanged after dropping to zero in June.  The pair has since come off its high and was last up 0.45% trading at 1.5654 close to 7 week highs as it was supported by predictions of interest rate increases by the Bank of England fueled by an increase in UK inflation.  

The yen strengthened against the dollar with the pair having reached a session low of 124.18 after coming off its high of 124.51 reached earlier in the day as the yen was supported by safe haven demand.  Solid US housing data supported the greenback with the pair recovering back to trade steadily around 124.40.   

The Australian and New Zealand dollars weakened against the greenback after gaining ground earlier in the session following an announcement from the Reserve Bank of Australia where the central bank stated that the Australian economy was becoming accustomed to a weaker currency.  The Aussie declined to a session low of 0.7320 while the kiwi dropped to a session low of 0.6556 as the greenback was supported by US data.  Last week the Aussie had tanked to 6 years lows of 0.7214 after the yuan’s devaluation before regaining ground once China’s central bank announced there was no need for extended depreciation of its currency.

The Canadian dollar held its ground against the greenback with the pair trading at 1.3076 coming off its session high of 1.3125.  The loonie was supported after an uptick in oil prices following the release of solid US housing data.  

Disclaimer:  This information has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.