The dollar extended losses against the euro and fell versus other major currencies on Tuesday after a report on U.S. home prices and consumer confidence came in weaker, raising the stakes for what the U.S. Federal Reserve after a two-day meeting that begins later in the session.
Independently, the euro regained its footing as Dutch and other non-German European bonds bounced back from the previous day's rout.
The ICE dollar index (DXY), which measures the greenback against a basket of six currencies, traded at 79.14, down from 79.406 in late North American trading Monday.
The euro rose to $1.3205 , from $1.3149 in the prior session.
The dollar fell more after the S&P /Case-Shiller 20-city composite fell 0.8% in February compared to January, on a seasonally-adjusted basis, prices rose 0.2%, which was still less than some expected, analysts said.
The dollar lost more ground after the Conference Board said its consumer-confidence index fell to 69.2 in April from a revised March reading of 69.5.
"The main event this week--the Federal Open Market Committee meeting/ Ben Bernanke press conference--kicks off today and concludes tomorrow, which may overshadow [other] releases," Michael Turner , strategist at RBC Capital Markets , said Tuesday.
The dollar had gained ground on Monday, with economic data as well as Dutch and French political developments raising more questions about Europe's ability to tackle its debt problems.
"Overall today, euro-zone political risks prevail," said Kathleen Brooks , research director at Forex.com. "The markets are digesting what political disillusionment in Holland and France really means for the future of the euro zone. Holland had to sell debt today, which went off relatively OK."
The Netherlands successfully sold 2 billion euros ( $2.6 billion ) of 2- and 25-year bonds before Dutch Prime Minister Mark Rutte tried to garner support from parliament for austerity cuts to the budget that caused his coalition to break apart and his government to resign.
Dutch bond yields jumped and the premium demanded by investors to hold Dutch debt over German bunds rose to its highest level in three years on Monday.
The yield on 10-year Dutch bonds declined Tuesday and the cost of insuring $10 million of Dutch debt against default using credit default swaps fell to $130,000 a year from $133,000 on Monday, according to data provider Markit.
That came after Moody's Investors Service said late Monday the government's fall was "credit-negative" but made no change to its stable outlook on the country's AAA rating.
Spain also sold debt, finding solid demand for three- and six-month notes, but saw yields rise.
The British pound traded at $1.6148 , up from $1.6127 .
British public sector borrowing was higher than expected in March, totaling 18.2 billion pounds, the U.K. Office for National Statistics reported. Economists had forecast borrowing of £16 billion.
"The pound shrugged off weak public finance data...Tomorrow's [gross domestic product] data is the key release for the pound this week," Brooks said.
Against the Japanese yen, the dollar was little changed at ¥81.20.
The Australian dollar dropped as low as $1.0245 , down from $1.0322 just before the release of much-weaker-than-expected first-quarter consumer price data that appeared to seal the case for an interest-rate cut next month. It lately traded at $1.0313 , little changed on the day.
- Deborah Levine ; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
04-24-12 1058ET
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