The dollar weakened against its peers today following data which showed that housing starts were less than forecast for November. The Census Bureau released data which revealed a sudden drop in housing starts from 1.045 million units in October to 1.028 million in November while experts had forecast an increase to 1.030 million last month. Building permits issued fell from 1.080 million in October to 1.035 million in November which was beyond the forecast decline to 1.060 million. Even though there are overall signs of recovery in the US housing market today’s data put pressure on the dollar and investors stepped aside in anticipation of the Fed’s announcement tomorrow.

The euro strengthened against the dollar as it was supported by data which showed that German economic sentiment in December jumped to a 7 month high. The ZEW Centre for Economic Research reported that its German economic sentiment index surged from 11.5 in November to 34.9 in December which was well over expectations of 20.8. The euro zone composite output PMI which factors both manufacturing and service sectors increased to a 2 month high of 51.7 off last month’s 16 month low of 51.1. The euro held its ground even though Germany’s private sector grew at a 18 month low while France’s private sector output stayed in negative ground.

The pound strengthened against the dollar as the market overlooked data released by the UK Office for National Statistics which revealed that the annual rate of consumer price inflation dropped from 1.3% in November to 1.0% in December marking over a 12 year low. Consumer prices declined 0.3% after a 0.1% rise in October on a month-over-month basis. Core CPI increased 1.2% in November after a 1.5% increase in October.

The yen strengthened against the dollar being supported by safe haven demand stemming from the initial reading of China’s HSBC manufacturing PMI at 49.5 for December from 50.0 in November marking its first down tick in 7 months. A reading of 49.9 was forecast by experts for this month.

The New Zealand and Canadian dollars strengthened while the Australian dollar weakened against the US dollar. Statistics Canada released data which showed that Canadian manufacturing sales declined by 0.6% in October while a decrease of 0.3% was expected. Manufacturing sales increased 2.2% in September.

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.