(Adds new analyst comment, U.S. housing data, FX table, NEW YORK dateline, byline, bullets; updates prices)
Euro hits six-week high vs dollar
U.S. housing starts rise in April
U.S. debt ceiling talks to continue next week
Chinese yuan weakens past 7 per dollar
The dollar rose to a seven-week high on Wednesday, boosted by safe-haven bets amid the risk of a U.S. debt default, with traders paring back bets on a Federal Reserve interest rate cut any time soon following solid U.S. consumer spending and housing data.
The U.S. dollar index, a measure of the greenback's value against six major currencies, climbed as high as 103.12 =USD , its strongest level since late March. It was last up 0.3% at 102.91.
The euro, meanwhile, dropped to a six-week low versus the dollar at $1.0811 EUR=EBS . It last changed hands at $1.0830, down 0.3%.
"Recent data is painting a more resilient picture of U.S. growth compared to Europe," said Joe Manimbo, senior market analyst at Convera in Washington.
"Moreover, elevated inflation and low unemployment on this side of the pond suggest any U.S. rate cuts are likely to materialize later rather than sooner."
Wednesday's data showed that U.S. single-family homebuilding increased in April, but data for the prior month was revised sharply lower.
Single-family housing starts, which account for the bulk of homebuilding, rose 1.6% to a seasonally-adjusted annual rate of 846,000 units last month. Data for March was revised down to show single-family homebuilding falling to a rate of 833,000 units instead of increasing to a pace of 861,000 units as previously reported.
That followed reports on Tuesday that U.S. retail sales rose in April, although lower than expected. But the underlying trend remained strong.
U.S. industrial production also gained, advancing 1% last month, easily topping expectations for a flat reading and up slightly from the revised 0.8% increase in March.
In late morning trading, the dollar rose 0.7% versus the yen to 137.37 yen, after earlier climbing to a two-week peak of 137.445 JPY=EBS .
The dollar also traded higher against sterling, which fell 0.2% to $1.2465 GBP=D3 . The pound fell as low as $1.2422, the weakest level since late April.
U.S. debt ceiling talks remained in focus. President Joe Biden will continue talks with congressional leaders on the United States' debt limit later this week, the White House said on Wednesday, as U.S. House of Representatives Speaker Kevin McCarthy vowed to avoid a default.
"I think at the end of the day, we do not have a debt default," McCarthy said in an interview with CNBC. Interest rate futures pricing implies no chance of a Fed rate cut in June, down from about a 17% chance seen a month ago.
"We expect some modest further increases in the dollar as markets continue to take out pricing for rate cuts," said Commonwealth Bank of Australia strategist Joe Capurso. "A rate hike is possible this year, though the hurdle is high."
Elsewhere, the Chinese yuan weakened past 7 per dollar on Wednesday for the first time in five months amid geopolitical tensions and more signs of China's post-COVID-19 recovery losing steam.
CNY/ In the offshore market, the dollar rose 0.2% to 7.00911 CNH= .
======================================================== Currency bid prices at 11:07AM (1507 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 102.9900 102.6000 +0.40% -0.483% +103.1200 +102.5300 Euro/Dollar EUR=EBS $1.0820 $1.0862 -0.38% +0.98% +$1.0873 +$1.0811 Dollar/Yen JPY=EBS 137.4450 136.3900 +0.78% +4.84% +137.4550 +136.3100 Euro/Yen EURJPY= 148.71 148.15 +0.38% +5.99% +148.7200 +148.0800 Dollar/Swiss CHF=EBS 0.8992 0.8966 +0.29% -2.75% +0.9026 +0.8950 Sterling/Dollar GBP=D3 $1.2465 $1.2487 -0.17% +3.07% +$1.2493 +$1.2422 Dollar/Canadian CAD=D3 1.3485 1.3479 +0.05% -0.47% +1.3535 +1.3442 Aussie/Dollar AUD=D3 $0.6642 $0.6654 -0.17% -2.55% +$0.6671 +$0.6629 Euro/Swiss EURCHF= 0.9729 0.9737 -0.08% -1.68% +0.9762 +0.9729 Euro/Sterling EURGBP= 0.8680 0.8698 -0.21% -1.85% +0.8720 +0.8678 NZ NZD=D3 $0.6237 $0.6231 +0.10% -1.77% +$0.6273 +$0.6228 Dollar/DollarDollar/Norway NOK=D3 10.8200 10.7170 +1.04% +10.33% +10.8410 +10.7150 Euro/Norway EURNOK= 11.7090 11.6240 +0.73% +11.53% +11.7310 +11.6349 Dollar/Sweden SEK= 10.4671 10.3698 +0.18% +0.57% +10.4899 +10.3837 Euro/Sweden EURSEK= 11.3229 11.3029 +0.18% +1.55% +11.3436 +11.2995 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5E^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
