Dollar Rises to One-Month High

The dollar advanced to a one-month high versus the euro and the yen as U.S. consumer confidence increased and crude oil prices dropped, reducing concern the economy may fall into a recession.

The currency rose against the yen and New Zealand's dollar as unemployment climbed in Japan last month and home building permits fell to the lowest in almost 22 years in New Zealand. The pound depreciated versus the dollar after an index of U.K. retail sales dropped in July to a 25-year low.

The dollar increased 0.9 percent to $1.5607 per euro at 10:42 a.m. in New York, from $1.5741 yesterday. It touched $1.5592, the strongest level since June 25. The U.S. currency appreciated 0.7 percent to 108.17 yen, from 107.46, and reached 108.29, the highest since June 25. The euro dropped 0.2 percent to 168.80 yen, compared with 169.17.

Sterling weakened 0.6 percent to $1.9813 after the Confederation of British Industry said its survey of 82 retailers showed 25 percent sold more goods than a year earlier and 61 percent sold fewer. The net rounded balance of minus 36 percentage points was the lowest since the survey began in 1983.

The yen declined earlier against the dollar after government reports showed Japan's unemployment rate rose in June to 4.1 percent, the highest level in almost two years, and household spending fell, adding to signs the economy's longest postwar expansion may be ending.

The Conference Board's confidence index rose this month to 51.9, higher than forecast, from a revised 51 in June. The Standard & Poor's 500 Index increased 1.2 percent, after falling 1.9 percent yesterday.

Crude oil for September delivery dropped as much as 3.5 percent to $120.42 a barrel. The euro-dollar exchange rate and oil have moved in the same direction 90 percent of the time during the past year, according to Bloomberg calculations based on the correlation of their value changes.

Dollar Rises to One-Month High, Bloomberg
7/29/2008 8:40:42 AM