Dollar slides on bearish consumer confidence data

By Vivianne Rodrigues

NEW YORK (Reuters) - The dollar fell on Friday as a plunge in U.S. consumer confidence raised concerns about an economic contraction in the second quarter and trimmed the chances the Federal Reserve will raise interest rates this year.

The unexpectedly sharp drop in a consumer sentiment index to a 28-year low in May eclipsed a report showing a rebound in building permits and construction starts for new U.S. homes, which briefly triggered some dollar buying.

"Consumer sentiment data are closely tied to consumer spending levels," said Andrew Busch, global FX strategist at BOM Capital Markets in Chicago.

"It really shows that the consumer is likely going to have low levels of spending which could translate into a quarter where we have negative GDP growth if this continues into June."

Consumer spending accounts for about two-thirds of the United States' gross domestic product.

The euro raced to a session peak of $1.5600. It was last trading at $1.5589, up almost 1 percent on the day. The dollar tumbled to an intraday low of 103.54 yen and was last quoted at 104.18 yen, down 0.5 percent.

The New York Board of Trade's dollar index, which charts the dollar's performance against a basket of six currencies, fell 0.7 percent to 72.836 .DXY.

Speculation that April's non-farm payrolls report would be revised to show deeper job losses than the initially reported 20,000 contraction probably added to the dollar's slide, but analysts were skeptical. Data on Friday showed combined figures from the country's various states indicated job losses of 151,000 in April.