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Dollar Weakening As Investors Await Fed Announcement

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The dollar is losing ground against all of its major rivals Tuesday afternoon. The Federal Reserve began its 2-day policy meeting and will announce its decision Wednesday afternoon.

The Fed is widely expected to leave interest rates unchanged when it concludes its policy meeting after the European close tomorrow. However, traders will be looking for clues about the outlook for monetary policy.

New residential construction in the U.S. unexpectedly decreased in the month of August, according to a report released by the Commerce Department on Tuesday. The report said housing starts fell by 0.8 percent to an annual rate of 1.180 million in August from a revised 1.190 million in July. Economists had expected housing starts to jump by 1.7 percent.

The report also said building permits, an indicating of future housing demand, spiked by 5.7 percent to a rate of 1.300 million in August from a rate of 1.230 million in July.

A report released by the Labor Department on Tuesday showed increases in U.S. import and export prices in the month of August.

The Labor Department said imports prices climbed by 0.6 percent in August after edging down by 0.1 percent in July. Economists had expected import prices to rise by 0.4 percent.

The report said export prices also rose by 0.6 percent in August following a 0.5 percent increase in the previous month. Export prices had been expected to edge up by 0.2 percent.

The dollar rose to an early high of $1.1951 against the Euro Tuesday, but has since pulled back to around $1.20.

The euro area current account surplus increased in July on higher primary income, the European Central Bank reported Tuesday. The current account surplus increased to a seasonally adjusted EUR 25.1 billion in July from EUR 22.8 billion in June.

Eurozone construction output increased for the second straight month in July, and at a stable pace, data from Eurostat showed Tuesday. Construction output climbed 0.2 percent month-over-month in July, the same rate of rise as in June, which was revised from a 0.5 percent decrease reported earlier.

Germany's economic confidence strengthened notably in September, survey data from the Mannheim-based Centre for European Economic Research/ZEW showed Tuesday. The ZEW Indicator of Economic Sentiment rose by 7 points to 17.0 in September. The score was forecast to rise to 13.

The French government downgraded the budget deficit projections for this year and next, the Finance Ministry said Tuesday. The government currently forecast a deficit of 2.9 percent of gross domestic product for 2017 and 2.6 percent for 2018.

The buck reached an early high of $1.3467 against the pound sterling Tuesday, but has since retreated to around $1.3525.

The greenback climbed to over a month and a half high of Y111.879 against the Japanese Yen Tuesday morning, but has since slipped to around Y111.465.

by RTT Staff Writer

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