Dollar Weakens Against Major Rivals On Rate Cut Hopes

(RTTNews) - The U.S. dollar fell against most of its major counterparts on Wednesday amid continued optimism about an interest rate cut by the Federal Reserve in its September meeting.

Fed Chair Jerome Powell said earlier this week that three inflation readings over the second quarter of this year provided policymakers greater confidence that the pace of price inflation increases is returning to the central bank's 2% target.

New York Fed President John Williams said in an interview to the Wall Street Journal, indicated that recent inflation readings are getting the policy makers closer to a disinflationary trend that they are looking for.

In economic news today, a report from the Commerce Department said housing starts shot up by 3% to an annual rate of 1.353 million in June after plunging by 4.6% to a revised rate of 1.314 million in May.

Economists had expected housing starts to jump by 2.6% to a rate of 1.310 million from the 1.277 million originally reported for the previous month.

The Commerce Department said building permits also surged by 3.4% to an annual rate of 1.446 million in June after tumbling by 2.8% to a revised rate of 1.399 million in May.

Building permits, an indicator of future housing demand, were expected to rise by 0.3% to an annual rate of 1.390 million from the 1.386 million originally reported for the previous month.

A separate report released by the Federal Reserve showed industrial production in the U.S. climbed by 0.6% in June after jumping by 0.9% in May. Economists had expected industrial production to rise by 0.3%.

The dollar index, which dropped to 103.65, recovered marginally to 103.75, but still remained weak, losing about 0.5% from Tuesday's close.

Against the Euro, the dollar weakened to 1.0942 a unit of the European currency, from 1.0900. The dollar slipped against the Japanese currency, fetching 156.30 yen a unit, compared to 158.35 yen a unit on Tuesday.

Against Pound Sterling, the dollar weakened to 1.3008 from 1.2975, and against the Aussie, it was up slightly at 0.6731.

The Swiss franc firmed to 0.8836 a dollar, rising sharply from 0.8936 franc a unit of the greenback. Against the Loonie, the dollar gained marginally to C$ 1.3687.