The U.S. dollar hit nine-month highs against the euro and rose against a basket of major currencies on Tuesday after strong U.S. housing data bolstered expectations for an earlier-than-expected rate hike from the Federal Reserve.
U.S. housing starts surged 15.7 percent to a seasonally adjusted annual 1.09-million unit pace in July, snapping two straight months of declines, the Commerce Department said on Tuesday. Economists polled by Reuters had expected starts to rise to a 969,000-unit rate last month.
Investors are closely watching for signs of when the U.S. central bank will hike rates from rock-bottom lows, which traders say will boost the dollar by driving investment flows into the United States.
The Labor Department said Tuesday that its Consumer Price Index edged up 0.1 percent last month after increasing 0.3 percent in June. In the 12 months through July, the CPI increased 2.0 percent after advancing 2.1 percent in June. The figures were in line with economists' expectations, according to a Reuters poll.
Analysts said the data had little positive impact on the dollar since it met expectations and would not likely affect the Fed's outlook for raising rates. The Fed targets 2 percent inflation and it tracks an index that is running even lower than the CPI.
The euro, which hit a nine-month low against the dollar in the wake of the U.S. housing starts and CPI data, was last down nearly 0.4 percent against the dollar above $1.33.
The dollar, which hit a two-week high against the Japanese yen near 103 earlier in the session, was last up almost 0.2 percent against the yen near 103 yen. The dollar was last up almost 0.3 percent against the Swiss franc to trade near 0.91 franc.
The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last up almost 0.34 percent just below 82.
The benchmark 10-year U.S. Treasury note yield was last at 2.38 percent, down slightly from 2.39 percent late Monday.