Dollar Falls Against Euro

The dollar fell against the euro as consumer confidence dropped this month to a 16-year low and housing prices plunged in April, reducing speculation the Federal Reserve will increase borrowing costs later this year.

The U.S. currency weakened as the central bank started a two-day meeting at which it's forecast to keep the target lending rate at 2 percent, the lowest level in more than three years.

The dollar fell 0.4 percent to $1.5583 per euro at 12:13 p.m. in New York, from $1.5518 yesterday. It touched $1.6019 on April 22, the weakest level since Europe's currency debuted in 1999. The dollar decreased 0.2 percent to 108.02 yen, from 107.85.

All 102 economists surveyed by Bloomberg predict the Fed will leave borrowing costs unchanged tomorrow. The dollar reached a one-month high of $1.5303 on June 13, four days after Fed Chairman Ben S. Bernanke said economic risks have faded.

Crude oil rose for a third day as the weaker dollar enhanced the appeal of commodities as an inflation hedge. Crude oil for August delivery increased as much as 1.5 percent to $138.75 a barrel.

The U.S. Conference Board reported that its confidence index dropped to 50.4 in June from a revised 58.1 in May. The gauge reached the lowest level since February 1992.

The S&P/Case-Shiller home-price index covering 20 U.S. metropolitan areas fell 15.3 percent in April from a year earlier after a 14.3 percent decline the prior month. It's the biggest decline since data began in 2001.

The dollar has gained 1.5 percent against the euro this quarter as traders bet the economic slowdown sparked by the collapse of the subprime-mortgage market will spread to Europe as the U.S. recovers. This year, the dollar is down 6.9 percent.

Dollar Falls Against Euro, Bloomberg
6/24/2008 10:50:20 AM