October 28, 2009
The dollar rose against the euro but fell against the pound on Tuesday amid weak U.S. consumer confidence and strong U.K. retail sales data. The Conference Board's consumer confidence index tumbled by 5.7 points to 47.7 in October. The present situation index dropped by 2.3 points to hit a 26-year low of 20.7. The expectations index collapsed by 8.0 points to 65.7. Buying intentions for autos, homes and major appliances declined.
The sharp decline was driven primarily by consumers' perceptions of deteriorating labor market conditions. It provided further evidence that the consumer sector will not be much of a driver of the recovery in the next few months. The report boosted safety-haven demand for the dollar, driving the U.S. currency higher against the euro.
The dollar fell against the pound as a Confederation of British Industry report showed U.K. retail sales grew at the most positiverate in almost two years in October. The survey also showed that sales in sectors related to the housing market improved, and that the high street anticipates stronger sales growth in November.
The latest S&P/Case-Shiller house price index for 20 major metropolitan areas rose 1.2 percent month-to-month in August after seasonally adjusted. It was the third consecutive gain of the index, with house prices 3 percent higher from the May low.
The government tax credit for first time home buyers boosted house prices and sales in recent months. Demand will take a hit after the tax credit expires in November, analysts said. Home prices are expected to drop another 5 percent from current levels, and to hit bottom in 2010.
The euro bought 1.4809 dollars in late New York trading compared with 1.4958 dollars it bought late Monday. The pound rose to 1.6386 dollars from 1.6303 dollars. The dollar fell to 1.0632 Canadian dollars from 1.0675 Canadian dollars, and rose to 1.0214 Swiss francs from 1.0189 Swiss francs. It fell to 91.81 Japanese yen from 92.21 Japanese yen.