The U.S. dollar was a bit sluggish early on in the session on Wednesday, but gained in strength as the day progressed, reacting to a slew of economic data from across the globe, and the minutes of the Federal Reserve's latest policy meeting.
The Federal Reserve's minutes, released this afternoon, said interest rates are likely to remain unchanged for some time. The minutes made several references to the coronavirus outbreak but are likely to reinforce expectations that the Fed will remain on hold at upcoming meetings.
Meeting participants viewed the current stance of monetary policy as likely to remain appropriate for "a time" as long as incoming data remains consistent with the Fed's outlook for moderate economic growth.
While the minutes reiterated that some trade uncertainties had diminished following the signing of the phase one U.S.-China trade deal, the Fed noted uncertainties about the global outlook remained.
The Fed specifically pointed to uncertainties posed by the outbreak of the coronavirus, which the central bank described as "a new risk to the global growth outlook, which participants agreed warranted close watching."
A report released by the Commerce Department on Wednesday showed housing starts slumped by 3.6% to an annual rate of 1.567 million in January after soaring by 17.7% to a revised rate of 1.626 million in December.
Economists had expected housing starts to tumble by 11.4% to a rate of 1.425 million from the 1.608 million originally reported for the previous month.
Meanwhile, the report said building permits spiked by 9.2% to an annual rate of 1.551 million in January after sliding by 3.7% to a revised rate of 1.420 million in December.
Data from the Labor Department showed that its producer price index for final demand climbed by 0.5% in January after rising by 0.2% in December. Economists had expected producer prices to inch up by 0.1%.
The dollar index, which eased to 99.40 early on in the U.S. session, rose to 99.72 later in the day, but retreated to 99.60 subsequently, still netting a gain of about 0.16%.
Against the Euro, the dollar strengthened to $1.0784 before losing ground and easing to $1.0800 levels. Euro area current account surplus grew in December after dropping in the previous month and the surplus for the full year 2019 was largely unchanged from a year ago, preliminary figures from the European Central Bank showed.
Data from Eurostat showed eurozone construction output dropped 3.1% month-on-month in December, after a 0.7% rise in November. In October, output fell 0.7%.
On a year-on-year basis, the construction output dropped 3.7% in December, after a 1.4% rise in the prior month.
Against Pound Sterling, the dollar rose to about $1.2900, gaining marginally. According to the data released by the Office for National Statistics, UK consumer price inflation rose more-than-expected in January, after easing in the previous month, to its highest level in six months, led by higher petrol prices.
The data showed inflation rose 1.8% year-on-year following a 1.3% increase in December.
The yen weakened to 111.36 a dollar, from around 110.10 a dollar.
The Aussie closed at 0.6694 against the dollar. Against Swiss franc, the dollar closed at 0.9841, gaining from 0.9832.
The dollar ended at 1.3221 against the loonie, after staying around 1.3260 earlier in the day. Data from Statistics Canada showed Canada's consumer price index rose 2.4% on a year-over-year basis in January, up from a 2.2% increase in December. On a seasonally-adjusted monthly basis, the CPI rose 0.1% in January, the data showed.
