The US dollar slipped against the euro on Tuesday as the market reacted to a positive US housing report and US Federal Reserve actions aimed at underpinning liquidity amid the global financial crisis.
The euro rose to 1.3029 dollars at 2200 GMT, from 1.2846 dollars late Monday.
The dollar slipped to 89.33 yen from 89.46 yen.
The National Association of Realtors struck an unexpected note of hope for the devastated US housing market, in a deepening slump since 2006.
NAR reported pending home sales rose 6.3 percent in December, confounding most private economists' expectations of a flat reading.
Briefing.com analysts noted that roughly 80 percent of pending home sales become existing home sales within two months.
"This December report should factor favourably in economists' forecast for existing home sales, particularly in January," they said.
The housing slump is at the epicentre of the US recession that began in December 2007.
Terri Belkas, currency strategist at Forex Capital Markets, said the dollar and the yen, traditionally seen as safe havens amid turmoil, pulled back "as evidence points toward some stabilisation in housing."
"While it is far too early to say that the US housing collapse may be nearing an end, these indicators do suggest that we're starting to see a stabilisation in demand for previously owned homes," she said.
"New home sales, on the other hand, are likely to remain dismal."
The euro surged throughout the day on Tuesday due primarily to US dollar weakness, she said.
The Federal Reserve announced on Tuesday it had extended for six months temporary programmes designed to inject liquidity into the financial markets.
The credit measures, including currency swap lines launched with 13 central banks at the height of market turmoil last year, have been extended through October 30. They were due to expire on April 30.
"The board of governors and the Federal Open Market Committee took these actions in light of continuing substantial strains in many financial markets," a statement said.
News that Fed was extending its currency swap accords with other major central banks for six months also helped bolster a willingness to take on some greater risk, traders said.
The prospects of an interest rate cut on Thursday by the European Central Bank (ECB) improved after eurozone producer price inflation fell again in December, but that did not appear to affect euro demand.
"The general situation remains largely unchanged. The dollar continues to benefit from the high uncertainty on the markets," Commerzbank analysts said in a note.
"That has led to the curious situation that even bad US data supports the dollar ... due to its status as a safe haven," they noted.
The ECB has reduced its key lending rate four times since October to 2.0 percent but eurozone borrowing costs are still higher than the near-zero levels in the United States and Japan.
Meanwhile the British pound recovered some ground against a weakening dollar but fell against the euro as the Bank of England was expected to cut its lending rate by 0.5 percentage point on Thursday to a record low of 1.0 percent to fight recession.
In late New York trade, the dollar fell to 1.1432 Swiss francs from 1.1611 late Monday.
The pound rose to 1.4458 dollars from 1.4272.
The euro rose to 1.3029 dollars at 2200 GMT, from 1.2846 dollars late Monday.
The dollar slipped to 89.33 yen from 89.46 yen.
The National Association of Realtors struck an unexpected note of hope for the devastated US housing market, in a deepening slump since 2006.
NAR reported pending home sales rose 6.3 percent in December, confounding most private economists' expectations of a flat reading.
Briefing.com analysts noted that roughly 80 percent of pending home sales become existing home sales within two months.
"This December report should factor favourably in economists' forecast for existing home sales, particularly in January," they said.
The housing slump is at the epicentre of the US recession that began in December 2007.
Terri Belkas, currency strategist at Forex Capital Markets, said the dollar and the yen, traditionally seen as safe havens amid turmoil, pulled back "as evidence points toward some stabilisation in housing."
"While it is far too early to say that the US housing collapse may be nearing an end, these indicators do suggest that we're starting to see a stabilisation in demand for previously owned homes," she said.
"New home sales, on the other hand, are likely to remain dismal."
The euro surged throughout the day on Tuesday due primarily to US dollar weakness, she said.
The Federal Reserve announced on Tuesday it had extended for six months temporary programmes designed to inject liquidity into the financial markets.
The credit measures, including currency swap lines launched with 13 central banks at the height of market turmoil last year, have been extended through October 30. They were due to expire on April 30.
"The board of governors and the Federal Open Market Committee took these actions in light of continuing substantial strains in many financial markets," a statement said.
News that Fed was extending its currency swap accords with other major central banks for six months also helped bolster a willingness to take on some greater risk, traders said.
The prospects of an interest rate cut on Thursday by the European Central Bank (ECB) improved after eurozone producer price inflation fell again in December, but that did not appear to affect euro demand.
"The general situation remains largely unchanged. The dollar continues to benefit from the high uncertainty on the markets," Commerzbank analysts said in a note.
"That has led to the curious situation that even bad US data supports the dollar ... due to its status as a safe haven," they noted.
The ECB has reduced its key lending rate four times since October to 2.0 percent but eurozone borrowing costs are still higher than the near-zero levels in the United States and Japan.
Meanwhile the British pound recovered some ground against a weakening dollar but fell against the euro as the Bank of England was expected to cut its lending rate by 0.5 percentage point on Thursday to a record low of 1.0 percent to fight recession.
In late New York trade, the dollar fell to 1.1432 Swiss francs from 1.1611 late Monday.
The pound rose to 1.4458 dollars from 1.4272.
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