Investing.com - The dollar was higher against a basket of major currencies on Tuesday, after data showing that U.S. housing starts rose to an almost eight-year high in July, while the pound was boosted by expectations for higher interest rates.
The Commerce Department reported that housing starts rose 0.2% to an annual pace of 1.21 million units, the highest level since October 2007.
It was the fourth straight month that housing starts remained above a one million-unit rate.
Building permits fell 16.3% in July, but that was after three consecutive months of strong gains.
The encouraging data came as investors were looking ahead to Wednesday’s minutes of the Federal Reserve’s July meeting, which it was hoped would provide more clarity on its plans to hike short-term interest rates for the first time since 2006.
The euro fell to session lows, with EUR/USD down 0.36% to 1.1034.
The US dollar index, which tracks the greenback against a basket of six major rivals, rose to 96.98 from around 96.82 ahead of the data.
USD/JPY was at 124.40, off lows of 124.19, while USD/CHF was at 0.9774.
The dollar edged lower against the safe haven yen and the Swiss franc earlier Tuesday after a steep drop in Chinese stocks fanned fears that Beijing could still let the yuan fall further after last week’s devaluation.
The pound remained close to seven-week highs after an uptick in UK inflation added to pressure on the Bank of England to raise interest rates.
GBP/USD was last at 1.5654, up 0.45% on the day.
The greenback was little changed against the Canadian dollar, with USD/CAD at 1.3076.
The Australian and New Zealand dollars fell to session lows of 0.7328 and 0.6589 respectively.
The Aussie fell to six-year lows of 0.7214 last week after the yuan depreciation before recovering after China's central bank said there was no basis for further depreciation in the currency.