Dollar mixed as market mulls economy

The greenback struggles against the 15-nation euro, gains vs. the yen, as investor confidence wobbles over the housing market and financial sector.

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By Catherine Clifford, staff writer

NEW YORK ( -- The dollar was mixed Friday as two days worth of housing market data showed continued economic instability.

The 15-nation euro bought $1.5697, up slightly from $1.5677 late in the day on Thursday. The dollar traded at ¥107.89, up from ¥107.34.

While most banks reported second-quarter earnings that were not quite as weak as expected, there is still concern about the strength of the financial sector.

"There is still a lingering negative sentiment regarding U.S. financials, and that is weighing heavily on investor confidence," said Gareth Sylvester, senior currency strategist at HIFX San Francisco.

Analysts said stock market moves also weighed on dollar sentiment.

On Thursday, the Dow lost 283 points, or 2.4%, but then opened higher on Friday after news of surprise strength in June durable goods orders.

"The equity market is a barometer for the U.S. economy," explained Sylvester. "It is representative of the U.S. market psyche," he said, so when the equity markets take a beating, that leads to weakness for the greenback.

The Census Bureau reported Friday that sales of new single-family homes in June came in at a seasonally adjusted annual rate of 530,000, down 0.6% from May's revised reading of 533,000. While the sales numbers were down from May, economists read the report as a positive because the previous three months were revised up significantly, indicating that the housing market may be stronger than initially expected.

But sales of existing homes slowed more than expected, hitting their lowest level in 10 years, according to a report released Thursday by the National Association of Realtors. Sales by homeowners slowed to an annual pace of 4.86 million, down 2.6% from a pace of 4.99 million in May.

"A lot of other consequences regarding consumer confidence are all directly affected by the housing data," said Sylvester.

As the U.S. economy continues to drag under the pressure of the mortgage meltdown, the greenback has been struggling against the euro.

"Until we get a clear direction with the housing sector on the path to recovery, then that is also going to weigh on the U.S. economy and the dollar," said Sylvester. To top of page

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