Dollar’s rebound extends despite US soft housing data

The US dollar is gathering momentum against its major rival currencies midweek. The Dollar Index rose above 100.50 earlier during the US trading session. At the time of writing the Index posts 100.417.

The US housing data missed expectations but failed to trigger a market reaction. The dollar started to outperform its rivals on Wednesday in the US Dollar Index , which tracks the USD’s valuation against a basket of six major currencies, climbing to fresh five-day highs above 100.50 in the American session.

The dollar managed to capture capital outflows out of Pound Sterling early Wednesday after data from the UK showed that inflation softened at a faster pace than expected in June. Moreover, the sharp upsurge seen in the USD/JPY pair following Bank of Japan (BoJ) Governor Kazuo Ueda’s dovish comments highlights strengthening demand for the USD.

The monthly data published by the US Census Bureau revealed on Wednesday that Housing Starts declined 8% on a monthly basis in June, following the 15.7% increase (revised from +21.7%) recorded in May. In the same period, Building Permits fell 3.7%, down sharply from May’s 5.6% increase. Despite the disappointing data, the USD clings to daily gains.