Tuesday, August 26, 2008

Dollar Falls on Speculation Reports to Show Flagging Spending

By Stanley White

Aug. 27 (Bloomberg) -- The dollar fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.

The greenback retreated from a two-year high against the British pound as economists forecast U.S. data this week will show declines in durable goods orders and consumption. The Australian dollar rebounded from an 11-month low as rising Asian stocks gave investors confidence to buy higher-yielding assets in a nation profiting from commodity exports to China and India.

``The numbers coming up are a reason to push the dollar lower,'' said Toru Tokoyoda, head of foreign exchange sales in Tokyo at Lehman Brothers Holdings Inc. ``There are doubts about the U.S. economy.''

The dollar declined to $1.4698 per euro at 10:01 a.m. in Tokyo from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14. The dollar fell to 109.22 yen from 109.60. The euro was little changed at 160.59 yen after dropping yesterday to 159.95, the lowest level since May 12. The dollar may rise to $1.4750 versus the euro today, Tokoyoda forecast.

Bookings for goods made to last several years were unchanged in July, compared with a gain of 0.8 percent in June, according to a Bloomberg News survey of economists before a Commerce Department report at 8:30 a.m. today in Washington. A separate report on Aug. 29 may show personal spending rose 0.2 percent, less than half the 0.6 percent gain in June, according to a separate survey.

``The prospects for the U.S. economy are still poor and it will continue to slow,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``There's not a lot of reasons to own dollars.''

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