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Dollar advances as consumer confidence falls

Dollar advances as consumer confidence falls

The dollar rose slightly Tuesday after a private research group said consumer confidence unexpectedly fell in June.
The 16-nation euro bought $1.4042 in late New York trading, down from the $1.4086 it bought late Monday. The British pound fell to $1.6462 from $1.6573, while the dollar advanced to 96.32 Japanese yen from 95.99 yen.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index now stands at 49.3, down from its revised May level of 54.8.
Because consumer spending accounts for more than two-thirds of economic activity in the United States, economists and investors watch it closely.
Meanwhile, a key housing index released Tuesday showed home price declines moderated in April.
"It appears that the consumer confidence report provided players with an opportunity to take profit on short (dollar) positions as the greenback had clearly become oversold amid illiquid, pre-holiday trading conditions," Bank of New York Mellon senior currency strategist Michael Woolfolk wrote in a client note.
Volatility in foreign exchange markets is expected to remain high this week as closely watched U.S. employment figures are released and the European Central Bank makes an interest rate decision, Woolfolk said.
The ECB is expected to keep its key interest rate unchanged at its meeting Thursday and cautiously note some signs that the economy of the 16 countries that share the euro is stabilizing following unprecedented liquidity injections and big declines in the cost of borrowing.
Higher interest rates can support a currency as investors steer funds to better returns in investments denominated in that currency.
Also Tuesday, official figures showed Germany's jobless rate edged down to 8.1 percent in June, posting a weak seasonal improvement as programs to put workers on shorter hours helped stabilize employment amid a serious recession.
In other late trading Tuesday, the dollar advanced to 1.1621 Canadian dollars from 1.1566 late Monday, and edged up to 1.0853 Swiss francs from 1.0818 francs.