Foreign exchange market. American session: the U.S. dollar traded higher against the most major currencies after the better-than-expected U.S. consumer inflation

The U.S. dollar traded higher against the most major currencies after the better-than-expected U.S. consumer inflation. The consumer price index in the U.S. rose 0.4% in May, exceeding expectations for a 0.2% gain, after a 0.3% increase in April. Food prices had shown the biggest increase since August 2011.

On a yearly basis, the U.S. consumer price index increased 2.1% in May, after a 2.0% gain in April. That was the biggest rise since October 2012. Analysts had expected the consumer price index to remain unchanged at 2.0%.

The U.S. core consumer prices excluding food and energy climbed 0.3% in May, slightly exceeding expectations for a 0.2% rise, after a 0.2% increase in April. On a yearly basis, the U.S. core consumer prices increased 2.0% in May, after a 1.8% gain in April. That was the fastest pace since February 2013.

The higher inflation could weigh on Federal Reserve’s decision when to raise short-term interest rates.

There is a weakness in the U.S. housing sector. The U.S. housing starts declined by 6.5% to a seasonally adjusted 1.001 million units in May from 1.071 million in April. Analysts had expected a decline of 3.7% to 1.034 million units.

The number of building permits in the U.S. fell by 6.4% to a seasonally adjusted 991,000 units in May from 1.059 million units in April. Analysts had forecasted building permits to decrease by 0.1% to 1.05 million units.

The euro traded lower against the U.S. dollar after the weaker-than-expected ZEW economic sentiment and the better-than-expected U.S. consumer inflation. The German economic sentiment dropped by 3.3 points to 29.8 in June from 33.1 in May. Analysts had expected an increase by 1.9 points to 35.0.

Eurozone’s ZEW economic sentiment climbed to 58.4 in June from 55.2 in May, missing expectations for a gain to 59.6.

The British pound traded slightly lower against the U.S. dollar. The unexpected decline in inflation in the U.K. and the stronger consumer inflation in the U.S. weighed on the British currency. The annual rate of inflation declined 1.5% in May, after 1.8% in April. That was the lowest level since October 2009. Analysts had expected the annual inflation rate to decrease to 1.7%.

On a monthly basis, inflation in the U.K. fell 0.1%, missing expectations for a 0.2% gain, after a 0.4% increase.

The decline was driven by falls in the price of bread, cereals and vegetables. Food prices declined 0.6%.

Core consumer price index excluding food costs in the U.K. climbed at annual rate by 1.6%, missing expectations for a 1.7% rise.

The Retail Prices Index (RPI) decreased to 2.4% in May from 2.5% in April.

U.K. house prices surged by 9.9% in the 12 months to April and reached a new high of £260,000.

The Swiss franc traded lower against the U.S. dollar. The producer & import prices in Switzerland rose 0.1% in May, after a 0.3% decline in April. Analysts had expected the producer & import prices to be flat.

On a yearly, producer & import prices in Switzerland declined 0.8% in May, meeting expectations, after a 1.2% fall.

The Canadian dollar traded lower against the U.S. dollar in the absence of any major economic reports in Canada. The better-than-expected U.S. consumer inflation weighed on the Canadian dollar.

The New Zealand dollar declined against the U.S dollar in the absence of any major economic reports in New Zealand. Concerns over the violence in Iraq weighed on the kiwi.

The Australian dollar dropped against the U.S. dollar due to concerns over the violence in Iraq and comments by the Reserve Bank of Australia.

The Reserve Bank of Australia (RBA) released minutes from its latest meeting. The RBA said that the current stimulus measures continue to be appropriate and the economic growth is expected to remain slightly below trend. Australia’s central bank added inflation in Australia is to remain within the target range of 2% to 3%.

New motor vehicle sales in Australia increased 0.3% in May, after a flat reading in April. On a yearly basis, new motor vehicle sales in Australia declined 2.0% in May, after a 1.9% drop in April.

The Japanese yen declined against the U.S. dollar in the absence of any major economic reports in Japan. The better-than-expected U.S. consumer inflation weighed on the yen.