U.S. Dollar Higher As Housing Starts Beat Expectations

(RTTNews) - The U.S. dollar appreciated against its major counterparts in the New York session on Tuesday, as stronger-than-expected housing starts and permits for May supported expectations for a rate hike by the Federal Reserve in July.

Data from the Commerce Department showed that U.S. housing starts unexpectedly skyrocketed in the month of May.

The Commerce Department said housing starts soared by 21.7 percent to an annual rate of 1.631 million in May after tumbling by 2.9 percent to a revised rate of 1.340 million in April.

Economists had expected housing starts to edge down to a rate of 1.400 million from the 1.401 million originally reported for the previous month.

The report said building permits also surged by 5.2 percent to an annual rate of 1.491 million in May after slumping by 1.4 percent to a revised rate of 1.417 million in April.

Building permits, an indicator of future housing demand, were expected to rise to a rate of 1.423 million from the 1.416 million originally reported for the previous month.

Investors are now pricing in a 71.9 percent chance of a 25 basis point increase at the Fed's next meeting in July.

The greenback advanced to 5-day highs of 1.0906 against the euro and 1.3252 against the loonie, off its early lows of 1.0946 and 1.3205, respectively. The next possible resistance for the currency is located around 1.07 against the euro and 1.35 against the loonie.

The greenback climbed to 5-day highs of 0.8987 against the franc and 1.2721 against the pound, from its early lows of 0.8950 and 1.2806, respectively. The greenback is seen finding resistance around 0.92 against the franc and 1.24 against the pound.

The greenback firmed to a 1-week high of 0.6145 against the kiwi and a 6-day high of 0.6762 against the aussie, reversing from its early lows of 0.6205 and 0.6855, respectively. The greenback may find resistance around 0.60 against the kiwi and 0.66 against the aussie.

In contrast, the greenback remained lower against the yen, at a 4-day low of 141.28. This may be compared to its previous nearly 7-month high of 142.25. If the dollar falls further, 138.00 is likely seen as its next support level.