RTTNews - The dollar extended its steep losses versus the sterling and gave back most of its early gains against the euro on Tuesday, as risk appetite re-entered the markets after a very brief bout of caution.
An unexpectedly positive reading on the mindset of the US consumer drove gains on Wall Street and a move back into higher-yielding counterparts of the dollar.
Its been a particularly brutal stretch for the dollar against the sterling, with traders betting that the buck's rally to a 23-year peak of $1.35 earlier in the year was way overdone.
The buck was stable in early dealing, but extended its recent losses after a report from the Conference Board indicated a substantial improvement in consumer confidence in the month of May. The consumer confidence index rising to its highest level in eight months.
The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised reading of 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month.
Upon the news, the dollar dropped to a new 6-month low of 1.5968 against the resurgent sterling. Versus the euro, the dollar tailed off after a strong start, slipping to 1.3895 -- not far from last week's 4-month low of 1.4050.
The dollar saw little movement against the yen, staying near 95. Last week, the buck hit a 2-month low of 93.85, hurt by speculation the US may lose its AAA rating.
Home prices continued to show record declines in the first quarter, according to a report released by Standard & Poor's on Tuesday, with the data suggesting that the recent signs of stabilization in the housing market have not yet led to a turnaround in prices.
The report showed that the S&P/Case-Shiller U.S. National Home Price Index fell 19.1 percent in the first quarter compared to the same quarter a year ago. The decrease marked the steepest decline in the series' 21-year history.
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