Dollar mixed against major currencies
Greenback rises against euro, pound but sinks versus yen. Investors keep eye on details of Detroit bailout.
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| Click on the chart to see other currencies |
NEW YORK (CNNMoney.com) -- The U.S. dollar was mixed against major currencies Tuesday, as stocks declined and investors awaited details of a proposed bailout of the auto industry.
The euro fell to $1.2931 in New York trading from $1.2936 late Monday.
Britain's pound slid versus the dollar to $1.4783 from $1.4904.
The Japanese yen gained against the dollar, dropping to ¥92.03 from ¥93.01.
The dollar was holding in a narrow range Tuesday, said Gareth Sylvester, senior currency strategist at foreign exchange brokerage HiFX. Sylvester said that there's not enough negative or positive news to push the market in either direction.
Currency traders view the low-yielding dollar as safe haven. As a result, the greenback often rallies when the broader stock market retreats. Conversely, the buck often loses ground against the higher yielding euro and pound when the stock market's appetite for risk is more robust.
The confidence that sent all three major gauges up 3.5% on Monday on news of a possible bailout for Detroit and investment in American infrastructure has since evaporated, said Sylvester.
An agreement on a loan package for the auto industry had been expected late Monday. But lawmakers were still debating the details Tuesday, with a package expected later today.
Dollar's near-term strength. Sylvester thinks that there's a good chance of continued dollar strength through December and into the first quarter of 2009 as investors remain pessimistic.
On the economic front Tuesday, the National Association of Realtors reported a smaller-than-expected 0.7% decline in pending home sales for October. Analysts had forecast a drop of 3%.
Meanwhile, the dollar has gained nearly 9% against the euro and roughly 17% against the pound since the failure of Lehman Brothers in mid-September.
Sterling was pressured by a report stating industrial production fell by 1.4% in October from the month prior, according to the British government.
The 15-nation euro fell against the dollar despite an unexpected rise in sentiment from German consumers. The index stands far below historical levels.
In contrast, the dollar has fallen nearly 13% against the yen during the same period.
Analysts say investors have been borrowing yen over the past 10 years in order to buy other assets, often in the United States, that have provided a higher return. As those assets, which include real estate, have fallen in value, investors have had to pay back the money to Japan, pushing up the value of its currency. 
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