Dollar Falls VS Euro

Dollar Falls Against Euro as Consumer Confidence Drops in June

By Bo Nielsen and Lukanyo Mnyanda

June 24 (Bloomberg) -- The dollar fell against the euro as consumer confidence dropped this month to a 16-year low and housing prices plunged in April, reducing speculation that the Federal Reserve will increase borrowing costs later this year.

The U.S. currency weakened as the central bank started a two-day meeting at which it's forecast to keep the target lending rate at 2 percent, the lowest level in more than three years. The yen depreciated versus the euro on speculation Japanese investors will use summer bonuses to buy overseas assets offering higher yields than at home.

``The Fed may come out being a little bit less hawkish than the market expects,'' said Win Thin, a currency strategist at Brown Brothers Harriman & Co. in New York. ``There's a risk the dollar weakens a little bit further.''

The U.S. currency fell 0.6 percent to $1.5608 per euro at 10:03 a.m. in New York, from $1.5518 yesterday. It touched $1.6019 on April 22, the weakest level since the European currency debuted in 1999. The yen increased 0.3 percent to 107.51 per dollar, from 107.85. Japan's currency dropped 0.2 percent to 167.73 per euro, from 167.35.

The U.S. Conference Board reported that its confidence index dropped to 50.4 in June from a revised 58.1 in May. The median forecast of 69 economists surveyed by Bloomberg News was for a reading of 56.

``Uncertainty about what the Fed's going to say and the weak U.S. data today are likely to keep the dollar on the back foot,'' said Carsten Fritsch, a currency strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. The dollar may trade as low as $1.5650 through tomorrow, Fritsch said.