Dollar weakens after rally of past few days

AP News
Posted: May 24, 2011 3:57 PM
Dollar weakens after rally of past few days

The dollar was weakening against most major currencies Tuesday, following a big rally over the past few days.

Fears about a deepening debt crisis in Europe have supported the dollar. But analysts say a slightly better-than-expected report on business confidence in Germany and strong investor demand for a $3.2 billion Spanish bond sale helped offset those worries, stabilizing the euro.

In the U.S., the government says sales of new homes picked up in April, the second straight monthly gain. Still, the housing market is far from a healthy level.

In late trading Tuesday in New York, the euro rose to $1.4113 from $1.4060 late Monday. It was worth $1.43 on Thursday.

Despite the euro's rise on Tuesday, the European debt crisis is still weighing on the euro, said UBS currency strategist Chris Walker in a note to clients.

Greece's main opposition leader refused to back new austerity measures, cutting hopes that it could fix its finances to get another loan package quickly from the International Monetary Fund. Meanwhile, ratings agency Moody's warned that restructuring Greece's debt could hurt the credit ratings of other European countries that are heavily in debt.

Economic data from Germany was better news for the euro. Germany's Ifo index, which measures business optimism, remained unchanged from April. Analysts had expected a decline.

Elsewhere, the U.S. Commerce Department said that new home sales rose 7.3 percent last month to a seasonally adjusted annual rate of 323,000. A normal housing market would show about 700,000 new-home sales a month.

In other trading Tuesday, the British pound rose to $1.6184 from $1.6119. The dollar fell to 81.90 Japanese yen from 81.97 yen and fell to 0.8793 Swiss franc from 0.8830.