U.S. dollar steadies ahead of Fed chair's hearing in Congress

NEW YORK, June 20 (Xinhua) -- The U.S. dollar treaded water on Tuesday as investors kept a wait-and-see stance one day ahead of Fed Chairman Jerome Powell's hearing in the U.S. Congress.

The dollar index, which measures the greenback against six major peers, was up 0.01 percent to 102.5371 in late trading.

The dollar gained ground on Tuesday morning, thanks to expectation-beating housing starts and permits in the United States in May and strong safe-haven demand before paring most of its gains in the afternoon.

The United States reported 1.631 million units of annualized housing starts in May, higher than forecast consensus of 1.4 million units and April's 1.34 million units, according to data issued by the U.S. Census Bureau on Tuesday morning.

Meanwhile, the annualized rate of permits stood at 1.491 million units in May, higher than forecast consensus of 1.433 million units and 1.417 million units in the previous month.

The fall in stock markets and lower commodity prices also drove up safe haven demand and bolstered the U.S. dollar on Tuesday.

The U.S. dollar's rebound is driven by rising demand for safe-haven assets and traders reacted to encouraging housing starts and building permits reports, noted Vladimir Zernov, analyst with market information supplier FX Empire.

Powell is scheduled to testify at the U.S. Congress in the coming two days, which draws investors' attention.

In late New York trading, the euro was down to 1.0917 U.S. dollars from 1.0919 dollars in the previous session, and the British pound fell to 1.2759 U.S. dollars from 1.2779 dollars in the previous session.

The U.S. dollar bought 141.3700 Japanese yen, lower than 141.9470 Japanese yen of the previous session. The U.S. dollar rose to 0.8978 Swiss franc from 0.8962 Swiss franc, and it rose to 1.3229 Canadian dollars from 1.3214 Canadian dollars. The U.S. dollar rose to 10.8024 Swedish Krona from 10.7285 Swedish Krona.

"We expect rate differentials between the U.S. dollar and other currencies to narrow and see the dollar's downtrend resuming in the months ahead," said UBS strategists in a mid-year outlook report issued on Tuesday.

Investors are advised to diversify their holdings of the U.S. dollar and add positions in the Japanese yen, British pound, euro, or the Swiss franc in a tactical manner, according to the UBS report.