Dollar slips on weak housing data

Associated Press

NEW YORK — The dollar slipped Tuesday after new data in the U.S. showed sales of new homes fell in July for the third straight month.

But a handful of better-than-expected economic reports, including Markit’s composite purchasing managers index, from Europe and China helped ease fears about the global economy.

“Last night’s Chinese PMI report and this morning’s Eurozone PMI numbers made investors feel less concerned about the outlook for the global economy,” said Kathy Lien, director of currency research at GFT.

In the U.S., the Commerce Department said Tuesday that sales of new homes fell nearly 1 percent in July to a seasonally adjusted annual rate of 298,000. If sales continue at this level, it could be the worst year for new-home sales in almost 50 years.

“The U.S. economy may be in tough shape, but the rest of the world is still holding steady, which is good news for risk,” Lien said.

The dollar, like the Swiss franc, Japanese yen and gold, had gained strength on fears of a slowdown in global growth. With the Dow Jones industrial average and overseas stocks higher, the dollar is losing favor Tuesday.

In afternoon trading, the euro rose to $1.4425 from $1.4373 late Monday, the British pound rose to $1.6505 from $1.6484 and the dollar dropped to 76.64 Japanese yen from 76.72 yen.

Analysts say trading is light and investors are shying away from big moves ahead of a major speech by Federal Reserve Chairman Ben Bernanke on Friday. Some expect Bernanke to hint at new measures to support the economy. But new Fed action could weigh further on the dollar.

In other trading, the dollar fell to 0.7892 Swiss franc from 0.7903 Swiss franc and fell to 98.80 Canadian cents from 98.93 Canadian cents.