Dollar Extends Gains Against Major Counterparts

(RTTNews) - The U.S. dollar gained against its major counterparts on Tuesday, with traders reacting to Canadian inflation data, policy announcements from the Bank of Japan and the Reserve Bank of Australia, and looking ahead to the Federal Reserve's monetary policy decision.

The U.S. central bank is expected to leave its benchmark interest rate unchanged, but the focus will be about what Fed officials say about lowering rates.

Recent hotter-than-expected consumer and producer price inflation readings have reduced optimism about the likelihood of the Fed's first-rate cut coming in June.

Fed Chair Jerome Powell and his colleagues will update their economic and rate projections on Wednesday for the first time since December.

In U.S. economic news today, a report released by the Commerce Department said housing starts spiked by 10.7% to an annual rate of 1.521 million in February after plunging by 12.3% to a revised rate of 1.374 million in January. Economists had expected housing starts to surge by 7.1% to a rate of 1.425 million from the 1.331 million originally reported for the previous month.

The report also said building permits shot up by 1.9% to an annual rate of 1.518 million in February after dipping by 0.3% to a revised rate of 1.489 million in January. Building permits, an indicator of future housing demand, were expected to jump by 1.7% to a rate of 1.495 million from the 1.470 million originally reported for the previous month.

The dollar index, which climbed to 104.06, pared some gains subsequently, but was still fairly up at 103.83, gaining nearly 0.4%.

Against the Euro, the dollar firmed to 1.0867, gaining marginally. Against Pound Sterling, the dollar was up slightly at 1.2719.

The dollar moved up sharply against the Japanese currency, fetching 150.88 yen a unit. The yen declined after the Bank of Japan maintained a dovish stance, vowing to continue purchasing government bonds at a "steady" pace amid persistent concerns over the economic recovery.

Against the Aussie, the dollar strengthened to 0.6532. The Reserve Bank of Australia today left interest rates at a 12-year high and signaled it may be done tightening monetary policy.

The Swiss franc is down slightly at 0.8881 a dollar.

The Loonie dropped against the greenback after data showed a surprise drop in Canada's headline inflation. The Loonie was down at 1.3567 a unit of the U.S. currency. Data from Statistics Canada showed that the consumer price index rose 2.8% year-on-year, down from a 2.9% gain in January. Economists had expected inflation to rise to 3.1%.