The dollar is little changed against its major competitors on Tuesday, following a stronger than expected housing start report. The U.S. currency has added slightly to yesterday’s weakness against the Euro and pound sterling, but is climbing against the Japanese Yen.
In another sign of recovery by the U.S. housing market, the Commerce Department released a report on Tuesday showing that housing starts unexpectedly increased in the month of October, reaching their highest level in over four years.
The report said housing starts climbed 3.6 percent to a seasonally adjusted annual rate of 894,000 in October from the revised September estimate of 863,000. The increase came as a surprise to economists, who had expected housing starts to fall to 836,000 from the 872,000 originally reported for the previous month.
Meanwhile, building permits, an indicator of future housing demand, fell 2.7 percent to a seasonally adjusted annual rate of 866,000 in October from a revised 890,000 in September. The drop in permits came roughly in line with economist estimates for a decrease to 865,000 from the 894,000 originally reported for September.
Eurozone finance ministers will meet in Brussels later today for another round of talks on Greece. They are seeking a plan to bridge a financing gap created by a two-year extension of Greece’s bailout program, while settling a dispute with the International Monetary Fund on the same. A tentative approval of the next tranche of aid to Greece is likely to be approved at the meeting.
Moody’s Investors Service on Monday stripped France’s of its coveted triple A rating with a one notch downgrade, in yet another blow to President Francois Hollande whose popularity has been diminishing amid the country’s economic gloom and rising unemployment.
The government bond rating on the Eurozone’s second largest economy was cut to Aa1 from Aaa, while the rating outlook was maintained at ‘negative.’
Moody’s said that the first driver underlying Moody’s one-notch downgrade of France’s sovereign rating was “the risk to economic growth and to the government’s finances, posed by the country’s persistent structural economic challenges.”
“France’s long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets,” it said.
The dollar bounced back from yesterday’s low against the Euro early Tuesday, to around $1.2764, but has since slipped back to around $1.2810.
Germany’s industrial producer price inflation weakened more than economists expected in October, data released by statistical office Destatis showed Tuesday. The producer price index rose 1.5 percent year-on-year in October, after gaining 1.7 percent in September. Economists had forecast growth to ease to 1.6 percent.
The buck reached a low of $1.5922 against the pound sterling yesterday and has slipped a bit further on Tuesday, to around $1.5935.
Mortgage lending in the United Kingdom increased from last year in October, reversing the decline seen in the previous month, data released by the Council of Mortgage Lenders (CML) showed Tuesday.
Overall mortgage lending increased 4 percent year-on-year to GBP12.9 billion in October, reversing the sharp dip reported for September. The latest value was the highest since November 2011, and indicates that the market weakness of recent months may be coming to an end.
The Bank of Japan on Tuesday decided to keep the key interest rate and its asset purchase program unchanged after expanding the stimulus for a second straight month in October, defying mounting political pressure to pursue more monetary easing.
The central bank kept its overnight call rate target unchanged at 0-0.1 percent by a unanimous vote and retained the total size of its asset-buying program at JPY 91 trillion. The decision was in line with expectations.
The central bank has been under tremendous pressure from the government to take further monetary easing in the face of flagging economic activity. The government cut its assessment of the economy for a fourth month in a row last week and said it “strongly expects” the Bank of Japan to continue “powerful monetary easing.”
The greenback has broken out to a 7-month high of Y81.749 against the Japanese Yen on Tuesday, extending its recent gains against the currency.
Japan’s all industry activity dropped 0.3 percent month-on-month in September, the Ministry of Economy, Trade and Industry showed Tuesday. Economists had forecast activity to expand 0.5 percent after remaining flat a month ago.
Japan’s department store sales fell 2.4 percent year-on-year in October, data from the Japan Department Stores Association showed Tuesday. It was the sixth straight annual drop and the rate of decline was faster than last month’s fall of 0.2 percent.