WASHINGTON (dpa-AFX) - The dollar was mostly subdued against major currencies on Wednesday, after scoring notable gains in the previous two sessions. Expectations that the Fed will cut interest rates later this month rendered the currency weak.
The International Monetary Fund's comment that the greenback is overvalued by 6% to 12%, based on near-term economic fundamentals contributed as well to the dollar's decline.
The dollar index eased to a low of 97.16 around noon, losing about 0.25% from previous close, before edging up to 97.22 by late afternoon.
Against the euro, the dollar edged down to 1.1225, losing 0.14% in the process.
Eurozone consumer inflation rose by a revised 1.3% year-on-year in June, slightly faster than the 1.2% rise in May, according to final data from Eurostat. The flash estimate showed a steady growth of 1.2% in June.
Eurozone construction output declined for the third straight month in May, another data from Eurostat showed Wednesday.
Construction output fell 0.3% month-on-month in May, smaller than the 1.7% decrease seen in April. This was the third consecutive decline in production.
Building construction dropped 0.3% and civil engineering output decreased 0.8% in May.
On a yearly basis, growth in construction output eased to a 4-month low of 2% from 3.1% in April.
In the EU28, construction output fell 0.3% on month but grew 2.5% from the previous year.
The British Pound Sterling gained about 0.23% against the dollar, at $1.2434. Earlier in the day, the sterling strengthened to $1.2456.
The yen recovered from an early lower of 108.33 and rose to 108.01 a dollar, gaining about 0.2% from previous close.
The dollar was down nearly 0.3% against the loonie with the dollar-loonie pair trading at 1.3050. Against the Aussie and Swiss franc, the dollar was down marginally at 0.7012 and 0.9873, respectively.
In economic news today, a report from the Commerce Department said housing starts slid by 0.9% to an annual rate of 1.253 million in June after slipping by 0.4% to a revised rate of 1.265 million in May.
Economists had expected housing starts to fall by 0.6% to a rate of 1.261 million from the 1.269 million originally reported for the previous month.
The report also said building permits plunged by 6.1% to an annual rate of 1.220 million in June after climbing by 0.7 percent to a revised rate of 1.299 million in May.
Economists had expected building permits to rise by 0.5% to a rate of 1.300 million from the 1.294 million originally reported for the previous month.
A report from the Federal Reserve on Wednesday said economic activity continued to expand at a modest pace overall from mid-May through early July.
The Beige Book noted the assessment of the economy was little changed from the prior reporting period.
The Fed referenced widespread concerns about the possible negative impact of trade-related uncertainty but said the economic outlook was generally positive for the coming months, with expectations of continued modest growth.
The report said job growth was slightly slower than the previous reporting period but continued at a modest pace on balance.
With regard to inflation, the districts indicated the rate of price inflation was stable to down slightly from the prior reporting period.
While higher tariffs and rising labor costs led to some increases in input costs, firms' ability to pass on cost increases to final prices was restrained by brisk competition.
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