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Poor reading on US consumers props dollar

Poor reading on US consumers props dollar

The dollar was choppy in Tuesday trading after a report showed consumers' confidence dropping this month, raising doubts about the vitality of the economy's recovery.
The 16-nation euro dropped to $1.4812 in morning New York trading from $1.4859 late Monday. Meanwhile, the British pound rose to $1.6314 from $1.6303. The dollar fell to 92.13 Japanese yen from 92.21 yen.
The dollar had been weaker in overnight trading in Asia and Europe before the release of this morning's report from the Conference Board on consumers' sentiment. The Consumer Confidence Index dropped to 47.7 in October, the second-lowest reading since May.
It had been expected to read 53.1 from 53.4 in September.
A level above 90 means the economy is on solid footing; one above 100 signals strong growth.
"Clearly, the consumer recovery is built on some very shaky foundations," said Paul Dales, U.S. economist at Capital Economics in Toronto.
That made the low-yielding dollar, with its access to the huge short-term U.S. government debt market, more attractive to investors Tuesday looking to curb risky trading.
Investors have tended in the past year to buy the dollar as a haven when economic reports or corporate earnings are worse than markets had expected. Earnings that are surprisingly strong have driven the buck lower as investors are prompted to seek out higher returns than they can get from the low-yielding dollar.
That low yield comes from the rock-bottom U.S. interest rate near zero that the Federal Reserve is maintaining to prompt lending and economic growth.
The dollar hit a fresh 14-month low of $1.5061 against the euro early Monday.
In other New York trading Tuesday, the dollar rose to 1.0222 Swiss francs from 1.0189 francs late Monday, but dipped to 1.0673 Canadian dollars from 1.0675.