Investing.com - The dollar traded largely lower against most major currencies on Tuesday after data revealed groundbreaking on new homes in the U.S. came in softer than expected in November.
In U.S. trading on Tuesday, EUR/USD was up 0.37% at 1.2483.
U.S. housing starts fell unexpectedly last month, official data showed on Tuesday.
The Census Bureau reported earlier that the number of housing starts fell to 1.028 million units in November from 1.045 million in the preceding month, whose figure was revised up from 1.009 million.
Analysts had expected the number of housing starts to rise to 1.030 million last month.
Building permits took a similar turn for the worse.
The Census Bureau reported that the number of building permits issued in November fell to 1.035 million from 1.080 million in the preceding month .
Analysts were expecting the number of building permits issued to fall to 1.060 million last month.
While a broader analysis of the U.S. housing sector still points to recovery, setbacks such as Tuesday's reports softened the greenback, namely as investors jumped to the sidelines to await the Federal Reserve's statement on monetary policy and interest rates due out on Wednesday.
Meanwhile in Europe, the single currency saw support after data revealed German economic sentiment in December improved to its highest level since May, indicating that conditions are becoming more favorable.
The ZEW Centre for Economic Research said that its index of German economic sentiment jumped to 34.9 in December from 11.5 in November, beating consensus forecasts for a 20.8 reading.
The report came after survey data showed that euro zone private sector activity grew at a slightly faster rate in December, but the rate of expansion was still one of the weakest seen over the past year.
The euro area composite output purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, rose to a two month high of 51.7, off November’s 16-month low of 51.1 and better than market calls for a 51.3 reading.
Germany’s private sector expanded at the slowest rate in 18 months while French private sector activity remained in contraction territory, though the euro held firm.
The dollar was down against the yen, with USD/JPY down 0.45% at 117.29, and down against the Swiss franc, with USD/CHF down 0.38% at 0.9620.
The yen enjoyed safe haven demand after the preliminary reading of China’s HSBC manufacturing purchasing managers' index came in at 49.5 in December, contracting for the first time in seven months and down from a final reading of 50.0 in November. Analysts had expected a reading of 49.9 this month.
The greenback was down against the pound, with GBP/USD up 0.60% at 1.5732.
The U.K. Office for National Statistics said the annual rate of consumer price inflation slowed to 1.0% last month from 1.3% in November. It was the lowest rate of inflation since September of 2002 and came in below forecasts for a 1.2% reading, though markets largely ignored the data.
Consumer prices fell 0.3% on a month-over-month basis after a 0.1% increase in October, missing market calls for an unchanged reading.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.2% last month, down from 1.5% in October. Economists had expected an unchanged reading.
The report also showed that the U.K. house prices index rose just 10.4% last month, down from 12.1% in October.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.33% at 1.1632, AUD/USD down 0.01% at 0.8211 and NZD/USD up 0.48% at 0.7782.
Statistics Canada reported earlier that local manufacturing sales decreased by 0.6% in October, surpassing expectations for a 0.3% contraction. Manufacturing sales rose 2.2% in September, whose figure was revised from a previously estimated 2.1% gain.
The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.47% at 88.30.
On Wednesday, expect markets to move on the Federal Reserve's statement on monetary policy and interest rates.
Elsewhere, the U.S. is to release data on consumer inflation and the current account.