© Reuters. The dollar traded almost flat as the two-day Fed meeting began on Tuesday
Investing.com – The dollar was almost unchanged against a basket of major currencies on Tuesday, a mixed report on U.S. housing activity has weighed on sentiment, but the easing of the geopolitical uncertainty of limited losses to the greenback.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.01% to 91.80.
The dollar is under pressure after a pair of mixed reports on the U.S. housing sector tapered to investor expectations of strong third quarter growth.
The Commerce Department said Tuesday U.S. residential construction fell by 0.8% to a seasonally adjusted annual rate of 1.18 million units in August, well below economists ‘ estimates of a 1.7% rise.
The report also highlighted a sharp 5.7% rise in building permits to a rate of 1.3 million units. It was the highest level since the month of January, beating forecasts of a 0.8% decline.
The duo of reports come as the Federal Open Market Committee (FOMC) two-day meeting began on Tuesday, in the middle of the expectations of the policy-making FOMC will announce plans to start unwinding its $4.5 tn bond portfolio at the conclusion of its meeting Wednesday.
As well as the plans of balance sheet unwinding, the Fed’s Summary of Economic Projections and dot plot are supposed to collect a large part of the attention, as investors are likely to assess whether the slowdown in the pace of inflation has changed the central bank’s longer-term interest rates.
The downward momentum of the dollar is limited, however, because it made strong gains against their safe haven counterparts like the yen and the Swiss franc in the middle of the discoloration of the geopolitical uncertainty of the Korean Peninsula.
The USD/JPY increased 0.22% to Y111.80, while USD/CHF added 0.30% to 0.9646.
EUR/USD tacked on 0.09% to $1.1966, while the EUR/GBP has gained 0.25% to £0.8879, despite data showing the Euro zone, the institutional investors are less optimistic about the six-month period, the economic outlook for the 28-member bloc.
GBP/USD fell to $1.3478, down 0.13%, while USD/CAD lost 0.15% to C$1.2279.