The dollar fell against most other major currencies Tuesday after U.S. consumer confidence slipped in April and home prices fell in February. Traders also bought the euro following strong demand at an auction fr Spanish government debt.

The Conference Board said its Consumer Confidence Index was at 69.2 in April, down from 69.5 in March. Economists were expecting an increase to 70.

The Standard & Poor’s/Case-Shiller home-price index shows that home prices fell in February from January in 16 of the 20 cities it tracks.

A sign that the housing market is still struggling to recover. [Read more...]

Asian stocks fell Monday after budget talks in the Netherlands collapsed over the weekend and a Socialist who wants to put France’s austerity plans in reverse won the first round of the country’s presidential election.

Japan’s Nikkei 225 index fell 0.3 percent to 9,533.48, as a strengthening yen hurt high-tech exporters. Hong Kong’s Hang Seng lost 0.7 percent to 20,871.23 and South Korea’s Kospi fell 0.3 percent to 1,969.69. Australia’s S&P/ASX 200 dropped 0.2 percent to 4,357.70.

Over the weekend, Dutch lawmakers failed to resolve differences over budget cuts needed to bring the Dutch deficit back within the European Union limit of 3 percent of gross domestic product. [Read more...]

The yuan displayed greater volatility on Monday but steered clear of testing a newly expanded trading band, suggesting investors were comfortable with the current range as Beijing tries to guide the economy through a controlled cooldown.

The yuan closed at 6.3150, down 0.19 percent from Friday’s close. It had opened sharply weaker than the central bank’s midpoint fixing, but even at its weakest point remained within the boundaries of the old trading band in effect prior to the recent move announced over the weekend.

It traded as low as 6.3250 per dollar – 0.46 percent weaker than the midpoint and 0.3 percent weaker from Friday’s close – just within the previous 0.5 percent limit and well shy of the new 1 percent band that went into effect Monday. [Read more...]

At any moment in the market, there are hundreds if not thousands of fundamental dynamics that factor into the fair value of the US dollar. Yet, there are only a few considerations that maintain a meaningful and lasting influence over its strength. For the greenback, going forward, we should remain focused on two aspects in particular: risk appetite trends and the outlook for monetary policy (not just the Feds). This is especially critical now as it seems that debate over the future of both has hit a fever pitch. Under such intense scrutiny, the acceptance of large trend shifts is at its height. And, at the very least, healthy debate within the market presents a case for volatility.

If we look at a long-term correlation between the Dow Jones FXCM Dollar Index and the S&P 500 (as a benchmark for underlying investor sentiment), it is clear that the link between the two is exceptional and fundamentally derived. In other words, when global investors need safety, they transfer their assets to the deep liquidity of the US Treasury and money markets – having to buy the dollar along the way. That being the case, why was the greenback struggling at the beginning of last week when equities were tumbling? [Read more...]