Single-family housing construction in the United States surged to 21.7 percent in May 2023.

US housing data released yesterday in New York positively impacted the markets while investors awaited Fed Chair Jerome Powell's upcoming testimony. During the Asian session on Wednesday (6/21), the USD index (DXY) remained stable around 102.60.

USD Index

In May 2023, there was a significant increase of 21.7 percent in single-family housing construction in the United States, surpassing expectations that predicted a minor slowdown of -0.8 percent. This data effectively accounted for the previous period's decline of -2.9 percent.

The Building Permits data for May 2023 was equally impressive. The preliminary report showed a growth of 5.2 percent, outperforming the -1.4 percent recorded in the previous period.

These positive housing data supported the US dollar ahead of Powell's testimony, indicating potential interest rate hikes due to improvements in the housing sector. On the other hand, some of the major currencies competing against the dollar are facing uncertainties.

AUD/USD experienced its fourth consecutive day of decline. The release of disappointing meeting minutes from the Reserve Bank of Australia (RBA) undermined market expectations for the Australian currency. Additionally, China's decision to introduce a new round of stimulus weakened market optimism regarding the region's growth prospects.

"The path of least resistance is further declines," said Commonwealth Bank of Australia strategist Joe Capurso. "The Aussie could dip below 0.6700 this week, particularly if Powell is hawkish."

The New Zealand dollar also faced downward pressure and is trading below 0.6200. While there was previous optimism about New Zealand's recovery prospects, some analysts are now concerned that the recession caused by Hurricane Gabrielle in the first quarter may extend into the next period.

"From here we see further stagnation in growth," said Mieneke Perniskie, a currency trader at Kiwibank in Wellington. "Our pick is that the kiwi will head towards the $0.57 level before the year is out, but it won't be in a straight line. First off the bat we will need to crack the $0.59 level. That may only be a matter of weeks away."