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NEW YORK: The US dollar weakened against other major currencies on Tuesday in the face of downbeat economic news on US consumer confidence and the housing market, and as the US central bank was expected to keep interest rates unchanged.
The subdued economic readings weighed on the dollar as analysts said they lessened the likelihood that the Federal Reserve would hike interest rates anytime soon despite mounting inflation concerns tied to soaring crude oil prices.
The European single currency rose to 1.5565 dollars around 2100 GMT, up from 1.5513 dollars in New York late Monday.
Against the Japanese currency, the dollar was changing hands at 107.83 yen, down from 107.87 yen a day earlier.
The dollar endured fresh declines as an index tracking US consumer confidence plunged in June amid growing concerns about jobs and the economy. The index is watched closely by the markets because consumer spending accounts for two-thirds of all US economic growth.
The Conference Board, a business research firm, said its monthly index of consumer confidence, which has slid all year, tumbled to 50.4 points in June from 58.1 points in May.
The June consumer confidence reading was the fifth weakest since the launch of the index in 1967. The decline in confidence was steeper than the expected 57.0 point reading forecast by most analysts.
"Consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear," said Lynn Franco, consumer research director at the Conference Board.
The dollar was further dented by further downbeat news on the housing market which entered a lengthy downturn over two years ago.
Home prices in some cities endured record-low annual price drops in the year to April as the troubled property market remained in a deep rut, according to the Standard & Poor's/Case-Shiller Home Price Indices.
One component of the report, which measures property prices in 10 major metropolitan areas, showed a record decline of 16.3 percent in the 12 months to April as the housing market's woes showed few signs of abating.
Analysts said a two-day meeting of Fed policymakers, which opened in Washington on Tuesday, would likely result in no change to US interest rates.
The Fed is widely expected to keep its key base rate pegged at 2.0 percent after aggressively slashing rates since September in a bid to shore up economic momentum.
"Markets are pricing in essentially no change to rates tomorrow, but anecdotally and given (Fed chairman Ben) Bernanke's more recent commentary, the market is clearly expecting a hawkish statement," ABN AMRO currency analyst Dustin Reid said in a briefing note.
Meanwhile the euro, which has surged against the dollar in the past year, managed to resist a negative reading on July consumer confidence in Germany, the eurozone's largest economy.
The survey showed that German consumers and bosses share serious worries about the economy, although record eurozone inflation will likely prevent policymakers from easing their concerns with interest rate cuts.
In late New York trade on Tuesday, the dollar fell to 1.0414 Swiss francs from 1.0460 late Monday.
The pound was quoted at 1.9704 dollars, up from 1.9651. - AFP/de
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