Investing.com - The dollar remains mostly lower against a basket of other major currencies on Tuesday, as weak economic reports from the U.S. fuelled fresh concerns over the strength of the country's recovery ahead of the Federal Reserve's monthly policy statement on Wednesday.
The Census Bureau said that U.S. building permits fell by 5.2% last month to 1.035 million units from 1.080 million in October. Analysts had expected building permits to slip 3.4% in November.
The report also showed that U.S. housing starts declined by 1.6% last month to 1.028 million units from an upwardly revised 1.045 million units in October. Analysts had expected housing starts to reach 1.030 million in November.
Preliminary data also showed that the U.S. manufacturing purchasing managers' index fell to an 11-month low of 53.7 this month from a reading of 54.8 in November.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.54% at 88.24, the lowest level since December 1.
EUR/USD climbed 0.53% to 1.2503, down from three-week highs of 1.2569 hit earlier in the session.
The euro strengthened after the ZEW Centre for Economic Research said that its index of German economic sentiment jumped to a seven-month high of 34.9 in December from 11.5 in November.
Earlier Tuesday, survey data showed that the euro area composite output PMI, which measures the combined output of both the manufacturing and service sectors, rose to a two-month high of 51.9, off November’s 16-month low of 51.1.
Germany’s private sector expanded at the slowest rate in 18 months, while French private sector activity remained in contraction territory.
The yen pulled away from one-month peak against the dollar, with USD/JPY still down 0.72% at 116.97, while USD/CHF declined 0.53% to trade at 0.9604.
Demand for the yen remained strong after the preliminary reading of China’s HSBC manufacturing PMI 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.
Elsewhere, GBP/USD gained 0.59% to 1.5730 even as the 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 2002 and was below forecasts of 1.2%.
The Australian dollar was steady, with AUD/USD at 0.8216. Earlier Monday, in the minutes of the Reserve Bank of Australia's December policy meeting, board members reiterated that "the most prudent course was likely to be a period of stability in interest rates."
Meanwhile, the New Zealand and Canadian dollars remained broadly stronger, with NZD/USD climbing 0.58% to 0.7789 and USD/CAD sliding 0.36% to 1.1629.
Statistics Canada earlier reported that local manufacturing sales decreased by 0.6% in October, more than the expected 0.3% slip. Manufacturing sales rose 2.2% in September, whose figure was revised from a previously estimated 2.1% gain.
The Russian ruble fell to fresh record lows against the dollar on Tuesday, after a surprise interest rate hike overnight failed to ease selling pressure on the currency.