Dollar Gains On Safe-haven Demand

(RTTNews) - The U.S. dollar firmed against some of its major counterparts on Wednesday on safe-haven demand as traders focused on the U.S. debt ceiling negotiations.

Hawkish comments from some Federal Reserve officials bolstered the chance of a 25-bps rate hike at the June FOMC meeting.

Cleveland Fed President Loretta Mester said on Tuesday that she doesn't think the central bank can hold interest rates steady yet.

Dallas Fed President Lorie Logan noted that a slower pace of tightening doesn't diminish commitment to achieving inflation goals.

On the debt ceiling talks front, President Joe Biden cut short his planned Asia trip to return to Washington and House Speaker Kevin McCarthy offered a somewhat upbeat assessment on the second round of debt-ceiling talks, suggesting that an agreement is possible by the end of the week.

Data from the Commerce Department showed housing starts jumped by 2.2% to an annual rate of 1.401 million in April after plunging by 4.5% to a revised rate of 1.371 million in March. Economists had expected housing starts to drop to an annual rate of 1.405 million from the 1.420 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits slumped by 1.5% to an annual rate of 1.416 million in April after tumbling by 3% to a revised rate of 1.437 million in March.

The dollar index surged to 103.11 around mid-morning, and despite easing to 102.88, remains positive, gaining more than 0.3% from the previous close.

Against the Euro, the dollar strengthened to 1.0811 before paring gains, but at 1.0840, remains nearly 0.25% up from the previous close.

The dollar is flat at 1.2487 against Pound Sterling, after having firmed to 1.2421 earlier in the day. Against the Japanese currency, the dollar is strong, fetching 137.68 yen a unit, nearly 1% up from Tuesday's close.

The dollar is down slightly against the Aussie at 0.6658. Against Swiss franc, the dollar is up, fetching CHF 0.8986, and against the Loonie, it was down marginally at C$ 1.3457.