Dollar Drifts Lower Against Major Rivals

(RTTNews) - The U.S. dollar turned weak against its major counterparts on Tuesday after data showed stronger than expected GDP growth in China in the first quarter.

Still, the dollar's downside was not any significantly sharp as a couple of Fed officials said interest rates need to remain higher in order to fight inflation.

Federal Reserve Bank of St. Louis President James Bullard said today that he favored continued interest-rate hikes to counter persistent inflation. Bullard said recession fears are overblown.

"Wall Street's very engaged in the idea there's going to be a recession in six months or something, but that isn't really the way you would read an expansion like this," Bullard told Reuters in an interview published Tuesday.

Federal Reserve Bank of Atalanta President Raphael Bostic said he favors raising interest rates one more time than holding them above 5% for some time to curb inflation that remains too high.

"There is still more work to be done, and I am ready to do it," Bostic said in an interview today.

On the economic front, data from the Commerce Department showed U.S. housing starts slid by 0.8 percent to an annual rate of 1.420 million in March from a revised rate of 1.432 million in February.

Economists had expected housing starts to decline to a rate of 1.400 million from the 1.450 million originally reported for the previous month.

The data also showed building permits plunged by 8.8 percent to a rate of 1.413 million in March from a revised rate of 1.550 million in February.

Building permits, an indicator of future housing demand, were expected to fall to a rate of 1.441 million from the 1.524 million originally reported for the previous month.

The dollar index, which dropped to 101.64 in the Asian session, continued to stay weak and was last seen at 101.73, down 0.36% from the previous close.

Against the Euro, the dollar weakened to 1.0975 from 1.0930. Against Pound Sterling, the dollar is trading at 1.2429 after strong UK wage data.

The dollar is weak against the Japanese currency as well, fetching 134.08 yen a unit, compared with 134.49 yen on Monday.

Against the Aussie, the dollar is at 0.6729, and against Swiss franc, it is trading at CHF 0.8965. The Loonie is flat at C$1.3394 a dollar.