Reuters: US Dollar Report: FOREX-U.S. housing data, Dutch debt sale boost euro

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-U.S. housing data, Dutch debt sale boost euro Apr 24th 2012, 20:05 Tue Apr 24, 2012 4:05pm EDT * Euro rallies but outlook clouded by political risks * Dutch auction sees reasonable demand * U.S. housing data sparks modest hope, risk appetite By Steven C. Johnson NEW YORK, April 24 (Reuters) - The dollar slipped against the euro on Tuesday after data suggesting U.S. home prices may be stabilizing spurred investors to seek higher returns beyond U.S. borders. Europe's common currency also got a boost after the Netherlands saw solid demand at a debt auction a day after a budget dispute toppled the government. But buyers failed to push the euro out of the broad $1.30-$1.35 range that has prevailed for most of the year. SSome traders said Europe's ongoing debt crisis would cap gains. Late in New York trading, the euro was at $1.3183, up 0.2 percent, after earlier rising as high as $1.3218. Traders said a pair of U.S. housing market reports stirred hope that a drawn-out decline in home prices may be nearing its end. The closely watched S&P/Case-Shiller index showed prices rose slightly for the first time in 10 months. "If we do see a lessening of downward momentum in housing, that's promising for U.S. consumer spending and ultimately for the global economy," said Karl Schamotta, senior strategist at Western Union Business Solutions in Calgary. "That will cause people to shift funds out of the low-yielding U.S. dollar and into foreign assets that offer higher yields," he said. The Federal Reserve is expected to reiterate its intent to keep benchmark U.S. interest rates near zero through 2014 when it ends a two-day policy meeting on Wednesday. The dollar also fell 0.2 percent to 0.9111 Swiss francs and 0.2 percent to 0.9888 Canadian dollars but edged up 0.1 percent to 81.29 yen. The Australian dollar hit a two-week low against the U.S. dollar after soft inflation data fueled expectations of interest rate cuts by the central bank.. EURO GAINS MAY BE FLEETING The euro, while stronger, was still stuck in the price band that has prevailed for most of 2012. Steven Englander, global head of FX strategy at Citigroup, said data suggested sales of foreign assets by euro zone residents helped prop up the euro in late 2011 and early 2012, as did foreign buying of euro zone debt when yields stabilized. Such repatriation has helped keep the yen strong in recent years despite a weak Japanese economy. But Englander said counting on those trends to continue underpinning the euro is risky, noting that Europeans do not hold as many foreign assets as the Japanese do. "One would tend to think this would work for a while but not forever," he said. Brown Brothers Harriman strategist Mark McCormick said the collapse of the Dutch government could complicate European Union efforts to ratify a new fiscal compact designed to tighten budget rules and keep countries from falling into debt. The cause of crisis in the Netherlands - inability to agree on an austerity budget involving deep spending cuts - is also keeping investors from pushing the euro too high. "If Holland can't agree to tighten its belt, then it's going to be very difficult to keep up the momentum for cuts in the more troubled countries," Schamotta said. The Netherlands is one of the euro zone's few remaining AAA-rated economies. Ratings agency Moody's said it was sticking with that rating for now but said the government's collapse was credit-negative.. What's more, not everyone is convinced that things are looking up for the U.S. housing market, meaning Tuesday's modest recovery in investor risk appetite may not last. Yale economist Robert Shiller, co-creator of the S&P/Case-Shiller index, said it might be a long time before home prices approach their pre-crisis levels. "I worry that we might not see a really major turnaround in our lifetimes," Shiller said on Reuters Insider. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions