Daily Afternoon Report 19/05/2015
The dollar rallied over 1% against a basket of other major currencies on Tuesday, after data showed that U.S. building permits and housing starts soared past expectations last month. The dollar was boosted after the U.S. Commerce Department said that the number of building permits issued last month increased by 10.1% last month to 1.143 million units from March’s total of 1.038 million. The report also showed that U.S. housing starts soared by 20.2% in April to hit 1.135 million units from March’s total of 944,000 units, easily surpassing expectations for an increase of 9.9% to 1.019 million. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was jumped 1.15% to 95.31, the highest level since May 11.
Also today, the ZEW Centre for Economic Research said that its index of German economic sentiment fell to 41.9, the lowest level since December, from April’s 53.3. Economists had expected a reading of 49.0.
Fears over the prospects of a Greek default also continued to pressure the single currency, even after the country’s labor minister said Tuesday that an agreement with its lenders on a cash-for-reforms deal would soon be reached.
Elsewhere, the U.K. Office for National Statistics said the annual rate of inflation dipped 0.1% in April after remaining unchanged in the previous two months. Economists had expected annual inflation to remain unchanged at zero. Consumer prices rose just 0.2% from a month earlier the ONS said, compared to forecasts for an increase of 0.4% after a 0.2% increase in March.
In the minutes of its May policy meeting, the Reserve Bank of Australia said it remained open to further rate cuts, due to the slowdown in China’s economy and concerns over the Australian job market.
At the same time, the Reserve Bank of New Zealand said its inflation expectations for the next two years ticked up to 1.9% in the last quarter from 1.8% in the three months to December.