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FOREX-Dollar slips on upbeat U.S. data, Bernanke news
August 25, 2009 / 2:44 PM / 8 years ago

FOREX-Dollar slips on upbeat U.S. data, Bernanke news

* Dollar falls as Bernanke reappointment boosts stocks

* Case-Shiller report shows improving U.S. housing sector

* U.S. consumer confidence rises in August (Updates prices, adds U.S. data)

By Gertrude Chavez-Dreyfuss

NEW YORK, Aug 25 (Reuters) - The dollar fell on Tuesday as generally upbeat U.S. economic data and Ben Bernanke’s reappointment as Federal Reserve chairman encouraged investors to take on riskier trades.

President Barack Obama on Tuesday renominated Bernanke to a second term as Fed chairman as the U.S. economy attempts to come out of the worst recession since the Great Depression. <For related news click [ID:nWBT013076]>. That contributed to a rally in stocks, benefiting currencies perceived to be higher risk such as the euro.

In addition, reports showing a rise in U.S. consumer confidence and an increase in prices of U.S. single-family homes for a second consecutive month in June also boosted risk sentiment. For the housing report, see [ID:nNYS005335]. For consumer confidence, click on [ID:nN25207057].

“These numbers are definitely reassuring, though I‘m more focused on the housing data. Still, the consumer confidence is like gravy today,” said Melvin Harris, market strategist, at Advanced Currency Markets in New York.

“We’re not in full-blown recovery mode yet but we are seeing more normalized markets. Consumer numbers are important numbers -- they are an indicator of what people are willing to spend and that matters for GDP growth.”

The yen was little changed against the U.S. dollar, erasing nearly all its gains earlier in the session.

The yen and dollar tend to fall when risk appetite improves.

“Risk appetite has been the story all year and it will be for some time,” said Jacob Oubina, currency strategist at Forex.com in Bedminster, New Jersey.

Meanwhile, the Bernanke story has been out for many hours, with the news citing a senior Administration official earlier. Currency markets, however, were slow to react as investors mainly took their cue from equities.

Analysts said the delayed reaction was quite normal in thin summer trading conditions as financial markets for direction.

“Clearly, Mr. Obama’s decision (to reappoint Bernanke) has been motivated by a realization that U.S. and global financial markets desperately need a sense of stability at a time when the banking system still remains vulnerable to further writedowns and credit contractions,” said Boris Schlossberg, director of FX research at GFT in New York.

In mid-morning New York session, the euro EUR= rose 0.2 percent on the day to $1.4324, clawing back some losses after slipping to the day's low of $1.4254 according to Reuters data. It rose as high as $1.4361.

The euro showed little reaction to figures confirming German’s economy grew by 0.3 percent in the second quarter and exited a recession. [ID:nLO664090]

The ICE Futures’ dollar index .DXY, a measure of the dollar’s value against six major currencies, was down 0.2 percent at 78.149.

The greenback traded at 94.38 JPY= yen, 0.1 percent lower from late on Monday. (Additional reporting by Steven C. Johnson; Editing by W Simon)

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