The dollar index (DXY00) on Wednesday rose by +0.29% and posted a 7-week high. The dollar was higher on hopes that U.S. lawmakers will soon reach a deal on the debt ceiling, which would be a positive factor for foreign investors. Also, Wednesday’s jump in the 10-year T-note yield to a 2-week high strengthened the dollar’s interest rate differentials. Finally, weakness in the yuan was bullish for the dollar after the yuan sank to a 5-1/2 month low Wednesday against the dollar.
Wednesday’s U.S. housing market news was mixed for the dollar. On the positive side, Apr housing starts unexpectedly rose +2.2% to 1.401 million, stronger than expectations of a decline to 1.400 million. Conversely, Apr building permits, a proxy for future construction, fell -1.5% m/m to 1.416 million, weaker than expectations of 1.430 million.
