The US dollar was little changed against a basket of currencies on Monday, as American traders paused to observe President’s Day. The greenback could face significant action this week, led by a slew of housing data and the minutes of the January 27-8 FOMC policy meetings.
The US dollar index, a weighted average of the greenback against a basket of six currencies, dipped 0.07 percent to 94.14. The dollar index tumbled sharply last Thursday following disappointing US retail sales.
On the economic calendar, housing data take centre stage this week. On Tuesday the National Association of Home Builders will release the monthly housing market index, a gauge of homebuilder confidence. The housing market index is expected to rise one point to 58 in February, nearing September’s nine-year high of 59. A reading above 50 is a general sign of optimism about housing market conditions, whereas a reading below that level denotes pessimism.
On Wednesday the Department of Commerce will report on housing starts and building permits, key indicators of overall housing activity. Housing starts are forecast to decline 1.7 percent to a seasonally adjusted annual rate of 1.07 million in January. Housing starts had rebounded sharply in December, rounding out the strongest year since 2007. Building permits are forecast to rise 2.7 percent in February, according to a median estimate of economists.
In addition to housing figures, the US government will release industrial production and producer inflation data on Wednesday.
Industrial production is forecast to rebound 0.3 percent in January after slipping 0.1 percent in December. The capacity utilization rate is forecast to rise to 79.9 percent from 79.7 percent.
The producer price index, which gauges inflation in primary markets, is forecast to fall 0.4 percent in January following a 0.3 percent drop the previous month. Excluding food and energy, the PPI is forecast to rise 0.1 percent.
The Federal Reserve on Wednesday will also release the minutes of its January Federal Open Market Committee policy meetings. The Federal Reserve announced last month it would be patient in starting to raise interest rates, a sign policymakers would keep monetary policy highly accommodative for longer than initially expected.
“Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy,” read the central bank’s January 28 statement.
The Fed added, “When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”