Dollar Hits Fourth New Low in Four Days vs. Euro
The dollar resumed its fall against the euro Tuesday, the fourth consecutive day of record lows, after a pair of economic reports pointed to the possibility of further interest-rate cuts by the Federal Reserve.
The euro rose to its fourth consecutive record high, $1.4153, after worrying consumer confidence and home sales data were released Tuesday morning. By late afternoon in New York, the 13-nation euro was at $1.4146 compared with $1.4087 late Monday.
The New York-based Conference Board said worries about jobs and the economy drove the U.S. Consumer Confidence Index for September to 99.8, below analysts' expectations. The index is at its lowest level since November 2005.
U.S. economic concerns were compounded by two housing reports. Sales of existing homes fell for a sixth straight month in August, pushing sales to the lowest point since 2002 because of turmoil in credit markets, a second report showed. U.S. home prices declined in July, posting their steepest drop in 16 years.
The declines may cause the Federal Reserve to lower its benchmark interest rate further, said David Jones, chief markets analyst at CMC Markets in London.
"It's clearly still too soon for last week's rate cut by the Fed to be taking any effect, but the question is now what happens at the two remaining meetings this year," he said.
It was a half-point interest rate cut to 4.75 percent by the U.S. central bank last week that dragged the dollar down. That came in response to the market turbulence in the fallout from the subprime mortgage crisis, and many analysts see more rate cuts ahead.
Lower interest rates, used to jump-start an economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
A weaker dollar makes vacations in Europe more expensive for U.S. travelers and could make European-made products more expensive for American consumers. But the lower dollar versus the euro also makes U.S. exports more competitive in Europe, which could benefit American manufacturers.
In other New York trading, the dollar slipped to 114.55 yen from 114.88 yen after Yasuo Fukuda, who has promised to bring stability and moderation to Japan's political scene, was elected prime minister.
The dollar rose against the British pound , to $2.0180 from $2.0214.
The dollar fell against the Swiss franc , from 1.1730 late Monday to 1.1661.
The greenback rose slightly against the Canadian dollar , to 1.0014 from 1.0011.