Dollar falls against euro on possible Greek aid

AP News
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Posted: May 31, 2011 4:01 PM
Dollar falls against euro on possible Greek aid

The dollar fell against the euro Tuesday as investors gained confidence that Greece would soon negotiate a new aid deal to stave off a debt default, and U.S. economic data pointed to slowing growth.

In afternoon trading in New York, the euro rose to $1.4378 from $1.4284 late Monday.

Greece received a package of euro110 billion ($157 billion) in rescue loans a year ago. But a review of the country's accounts by experts from the European Union, International Monetary Fund and the European Central Bank is expected to show that Greece is going to need even more low-cost loans to keep its country running.

If Greece gets additional aid, it would help ease fears of a looming default that could hurt the European banks that hold Greek bonds. Those fears weighed on the euro last week, sending the currency below $1.40 for the first time in two months.

Weak economic data from the U.S. also weighed on the dollar on Tuesday. The Conference Board's Consumer Confidence Index fell unexpectedly to 60.8 in May from a revised 66 in April, a sign that high gas prices, a choppy job outlook and a moribund housing market are taking a toll. Meanwhile, Standard & Poor's/Case-Shiller 20-city index showed that home prices dropped to their lowest level since 2006.

"Today's (consumer confidence) report was another in a string of negative economic numbers for April and May that suggest the U.S. economy has hit a soft patch in its longer-term recovery," wrote Michael Woolfolk of Bank of New York Mellon in a research note.

In other trading Tuesday, the British pound fell to $1.6448 from $1.6474 Monday. The dollar edged up to 0.8532 Swiss franc from 0.8522 Swiss franc but fell to 96.88 Canadian cents from 97.72 Canadian cents.

Elsewhere, the U.S. currency rose against the yen after ratings agency Moody's warned that it was reviewing Japan's debt rating for a possible downgrade due to poor economic growth after the March tsunami and concern over the country's public debt.

The dollar rose to 81.50 Japanese yen Tuesday from 80.91 Japanese yen on Monday.