The dollar steadied above the previous day's 15-year troughs against a basket of currencies on Tuesday, as investors awaited U.S. data to determine how deeply the global credit crunch has affected the economy.

The dollar made particular gains against sterling after a report in a British newspaper sparked worries over troubles in the UK financial sector arising from the credit crisis.

Investors will be looking to U.S. existing home sales and consumer confidence reports later in the session and analysts say weakness in these numbers could push the Federal Reserve to follow last week's half-percentage-point interest rate cut with more policy easing.

That should further erode the dollar's yield advantage over other currencies, particularly the euro, and could spark a fresh sell-off in the U.S. currency.

The bottom line is still that it's a very weak dollar. I would imagine these numbers will either keep the dollar at current levels, or they would add to the dollar's fall, said Niels Christensen, FX strategist at Nordea in Copenhagen.

By 7:12 a.m., the dollar's trade-weighted index against six major currencies was steady at 78.547, off a 15-year low of 78.310 hit on Monday. The index hit the all-time low of 78.190 in 1992, a level analysts said would provide a test of whether the dollar decline deepens or pauses.

The euro was steady at $1.4091 after striking a record high of $1.4130 the previous session, according to Reuters data. It showed little reaction to a slightly weaker than expected German Ifo business confidence report.


Sterling fell 1 percent against the yen to 230.05 yen and 0.6 percent versus the dollar to $2.0103.

Investors sold the pound after the Independent reported that Britain's bank deposit protection scheme holds only 4.4 million pounds ($8.9 million). Though it is much smaller than the U.S. Federal Deposit Insurance Corporation's $49 billion fund, it can ask banks for more money.

The news raised worries over the stability of the British financial system after depositors and fuelled broad risk aversion. This prompted investors to cut back on carry trades, in which a low-yielding currency like the yen is used to fund investment in high-yielders like the New Zealand dollar.

The New Zealand dollar fell 1 percent against the yen to 84.90 yen. The U.S. currency was down 0.3 percent against the yen at 114.49 yen, dragged down by the yen's rise against sterling and other high-yielding currencies.

The euro was also weaker, at 161.36 yen.

U.S. consumer confidence data for September is due at 10:00 a.m., with the index expected to ease to 104.0 from 105.0.

Existing home sales, due at the same time, are seen falling to 5.49 million in August from 5.75 million the previous month.

The July Case-Shiller home price index -- seen by economists as one of the most accurate measures of activity in the sector, albeit one published with a big delay -- is due at 9:00 a.m.

(Today's data) could confirm market fears that the cooling housing market is starting to hit consumer confidence and therefore U.S. consumer spending, said Niels From, currency strategist at Dresdner Kleinwort in Frankfurt.

After the Fed rate cut last week the market said the risk for a hard landing in the U.S. has peaked. (But) declining consumer confidence could put this kind of conclusion into question and market may again turn more negative about the U.S. economy in the medium term.