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Dollar Falling After Mixed Economic Reports


The dollar is losing ground against all of its major rivals Tuesday afternoon. U.S. economic data was mixed this morning, with a weaker than expected report on housing starts and a strong read on industrial production. The buck is turning in an especially weak performance against the Euro after German economic confidence continued to improve and the euro area GDP data remained steady.

After reporting a steep drop in new residential construction in the previous month, the Commerce Department released a report on Tuesday showing that housing starts in the U.S. unexpectedly saw further downside in the month of April.

The report said housing starts fell by 2.6 percent to an annual rate of 1.172 million in April after tumbling by 6.6 percent to a revised 1.203 million in March. Economists had expected housing starts to climb to a rate of 1.260 million from the 1.215 million originally reported for the previous month.

Industrial production in the U.S. increased by much more than anticipated in the month of April, according to a report released by the Federal Reserve on Tuesday.

The report said industrial production jumped by 1.0 percent in April after climbing by a downwardly revised 0.4 percent in March. Production rose for the third consecutive month and saw its largest monthly gain since February of 2014.

Economists had expected production to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.

The dollar has dropped to a 6-month low of $1.1090 against the Euro Tuesday afternoon, from an early high of $1.0978.

The euro area economy grew at a steady pace in the first quarter as initially estimated, flash data from Eurostat showed Tuesday. Gross domestic product climbed 0.5 percent sequentially, the same pace of growth as seen in the fourth quarter. The rate came in line with preliminary flash estimate published on May 3.

The euro area trade surplus increased in March from a month ago, as exports rose and imports fell, preliminary data from Eurostat showed Monday. The seasonally adjusted trade surplus rose to a 3-month high of EUR 23.1 billion in March from EUR 18.8 billion in February. Economists had expected a surplus of EUR 18.7 billion for the month.

German economic confidence continued to improve in May, survey data from the Mannheim-based Centre for European Economic Research/ZEW showed Tuesday. The ZEW Indicator of Economic Sentiment rose 1.1 points to 20.6 in May. This was the highest score since August 2015 but below the expected level of 22.0.

The French economy expanded at a slightly faster pace in 2016, data published by the statistical office Insee showed Tuesday. Gross domestic product climbed 1.2 percent in 2016 versus revised 1.1 percent expansion in 2015.

French consumer price inflation accelerated as initially estimated in April, though slightly, latest figures from the statistical office Insee showed Tuesday. The consumer price index climbed 1.2 percent year-over-year in April, just above the 1.1 percent rise in March. That was in line with the flash data published on April 28.

The buck has rebounded to around $1.2915 against the pound sterling this afternoon, after falling to an early low of $1.2957.

UK inflation accelerated to the highest since 2013 largely due to higher air fares in April. Inflation rose more-than-expected to 2.7 percent in April from 2.3 percent in March, data from the Office for National Statistics showed Tuesday. Inflation was forecast to rise to 2.4 percent.

The greenback reached an early high of Y113.772 against the Japanese Yen Tuesday morning, but has since retreated to around Y113.050.

Japan's tertiary activity index decreased unexpectedly in March, figures from the Ministry of Economy, Trade and Industry showed Tuesday. The tertiary activity index dropped 0.2 percent month-over-month in March, after remaining flat in February. Meanwhile, economists had expected a 0.1 percent increase for the month.

by RTTNews Staff Writer

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