- Housing starts & building permits data disappoint on Wednesday.
- Fed’s Beige Book says the U.S. economy continued to expand in recent weeks.
- US Dollar Index fails to stay above 95.
Earlier today, the US Dollar Index, which tracks the greenback against a basket of six major currencies, was able to build on its bullish momentum from Tuesday and break above the 95 mark to touch its highest level since late June at 95.18. However, the index, once again, failed to preserve its momentum and erased its daily gains to turn flat near 94.75 during the NA session.
The data from the U.S. on Wednesday showed that housing starts decreased by 12.3% in June while building permits contracted by 2.2%. Commenting on that data, “the recent weakness in housing starts is perplexing, given continued tight supply of homes available for sale and fairly high levels of builder confidence. We suspect that supply issues are now weighing a little more heavily on homebuilders,” Wells Fargo analysts said.
In the second half of the session, the Federal Reserve released its closely followed Beige Book, which didn’t reveal anything markets already didn’t know, and the US Dollar Index didn’t show a significant reaction. As of writing, the DXY was at 94.83, up 0.12% on the day.
“The U.S. economy continued to expand in recent weeks,” the Fed said and added: “All districts reported labor markets were tight; many said the inability to find workers constrained growth. On balance, wage increases were modest to moderate.”
Regarding Trump administration’s trade policy, the Beige Book highlighted that manufacturers in all districts voiced their concerns over tariffs as they saw them as the reason behind higher prices and supply disruptions.
On Thursday, the macroeconomic docket in the U.S. will feature weekly jobless claims and Philly Fed Manufacturing Index.
Technical levels to consider
With a daily close above 95 (psychological level), the index could target 95.25 (Jun. 28 high/2018 high) and 96 (psychological level). On the downside, supports are located at 94.65 (20-DMA), 94.15 (50-DMA) and 93.70 (Jul. 9 low).
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