Dollar Pares Some Gains After Climbing To 3-month High

The U.S. dollar strengthened against most of its peers on Tuesday, hitting a three-month high in the process, on safe-haven appeal amid worries the surge in coronavirus variant might dent global economic recovery.

A report released by the Commerce Department showed new residential construction in the U.S. showed a substantial increase in the month of June.

The report said housing starts spiked by 6.3% to an annual rate of 1.643 million in June after jumping by 2.1% to a revised rate of 1.546 million in May. Economists had expected housing starts to increase by 1.1% to a rate of 1.590 million from the 1.572 million originally reported for the previous month.

On the COVID-19 front, the Centres for Disease Control and Prevention placed the U.K. on its highest risk category, ordering U.S. citizens to "avoid travel to the United Kingdom". Brazil, South Africa and the Netherlands were also included on Level 4 category due to a spike in infections.

The dollar index, which rose to 93.17, gave up gains subsequently and was up just marginally at 92.96 a little while ago.

Against the Euro, the dollar firmed to 1.1784, gaining about 0.15%. The euro area current account surplus dropped to a seasonally adjusted EUR 12 billion in May from EUR 22 billion in April, data from the European Central bank showed. In the same period last year, the surplus totaled EUR 6 billion.

The Pound Sterling weakened against the dollar, fetching $1.3628 a unit, more than 0.35% less than Monday's close.

Against the Yen, the dollar gained, fetching 109.85 a dollar, compared to 109.45 Monday evening, weighed down by a surge in new infections of the Delta variant. With just three days left for Tokyo Games, new coronavirus cases are being found among athletes and non-athletes in the Olympic Village.

Data from the Ministry of Internal Affairs and Communications showed that Japan overall inflation climbed 0.2% on year in June.

Against the Aussie, the dollar gained nearly 0.2%, firming to 0.7330 from 0.7344.

The Swiss franc weakened to 0.9213 a dollar from 0.9175. Switzerland's exports grew at a softer pace in the second quarter, data from the Federal Customs Administration showed. Exports increased 1% sequentially in the second quarter, after a 5% rise in the first quarter, while imports grew 1.2% in the second quarter, after a 1.7% rise in the previous quarter.

The trade surplus rose to CHF 11.525 billion in the second quarter from CHF 11.4 billion in the previous quarter. In the second quarter of 2020, the trade surplus was CHF 9.093 billion.

The Loonie strengthened to 1.2676 a dollar, gaining from 1.2750 as oil prices rebounded.

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