The dollar rose to a four-month high against a basket of major currencies on Tuesday after the release of data showing US housing starts rose more than expected in June, underpinning a theme of strength in the US economy. Groundbreaking on US homes surged 4.8 percent to a seasonally adjusted annual pace of 1.19 million units, the Commerce Department said.
After June's jobs report showed US employers added 287,000 jobs, beating expectations by more than 100,000, continued positive data has some investors pricing back in the chances the Federal Reserve will raise US overnight interest rates, analysts said. Higher interest rates increase a currency's return, making it more attractive to investors. The dollar index, which tracks the greenback against six major currencies, rose to 97.126, its highest level since mid-March.
The rise in the dollar index was backed by a sizeable fall in the euro, which dipped to an 11-day low against the dollar of $1.1011. The euro was last down 0.5 percent at $1.1017. The dollar also gained ground against the yen, touching its highest level against the Japanese currency since June 24, the day after Britain's surprise vote to leave the European Union. The dollar rose to 106.52 yen.
The dollar also was boosted by expectations of upcoming central bank easing from the Reserve Bank of Australia and Reserve Bank of New Zealand. The Australian dollar fell 1.5 percent to an 11-day low of $0.7476, while the New Zealand dollar hit a three-week trough, falling 1.35 percent to 0.7018, as investors ramped up bets that both central banks could ease monetary policy as early as next month.
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