WASHINGTON (dpa-AFX) - The U.S. dollar edged lower against its major counterparts on Tuesday as traders continued to bet the Federal Reserve will start reducing interest rates from the first quarter of the coming year.
Despite hawkish comments from some Fed officials, analysts are optimistic that the U.S. central bank will begin rate cuts soon.
Chicago Fed President Austan Goolsbee said on Monday that he was confused by market reaction to Fed Chief's remarks on possible rate cuts and the U.S. central bank is not precommiting to cutting rates soon and swiftly.
Cleveland Fed President Loretta Mester also said that financial markets had got 'a little bit ahead' of the central bank with respect to rate cut expectations.
On the other hand, San Francisco Fed President Mary Daly said cuts to the U.S. central bank's benchmark rate are likely to be appropriate next year because of an improvement in inflation.
CME Group's FedWatch Tool is currently indicating a 67.5% chance the Fed lowers rates by a quarter point in March 2024.
The dollar index dropped to 102.07 earlier in the session, and was at 102.16 a little while ago, down nearly 0.4% from the previous close.
Against the Euro, the dollar weakened to 1.0978 from 1.0925, and against Pound Sterling, it eased to 1.2727 from 1.2649.
The dollar gained against the Japanese currency, fetching 143.89 yen a unit, up from 142.80 yen a unit on Monday. Against the Aussie, the dollar dropped to 0.6762, giving up more than 0.8%. The Swiss franc strengthened against the greenback, firming to CHF 0.8611 from CHF 0.8670, while the Loonie firmed to C$ 1.3339 a dollar, gaining from C$ 1.3401.
In U.S. economic releases, a report from the Commerce Department said housing starts soared by 14.8% to an annual rate of 1.560 million in November after inching up by 0.2% to a downwardly revised rate of 1.359 million in October.
The surge surprised economists, who had expected housing starts to decrease by 0.9% to an annual rate of 1.360 million from the 1.372 million originally reported for the previous month.
Meanwhile, the Commerce Department said building permits slumped by 2.5% to an annual rate of 1.460 million in November after jumping by 1.8% to an upwardly revised rate of 1.498 million in October.
Building permits, an indicator of future housing demand, were expected to fall by 1.1% to an annual rate of 1.470 million from the 1.487 million originally reported for the previous month.
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