Dollar gains on lower oil, global weakness
Falling crude prices and a gloomy outlook for economies in Europe and Japan helps send the U.S. currency higher.
NEW YORK (CNNMoney.com) -- The dollar gained ground against other major currencies Tuesday as oil prices tumbled and the global economy continued to show sings of weakness.
The euro fell to $1.4531 from $1.4670 Friday afternoon in New York. Markets in the United States were closed Monday for the Labor Day holiday.
The economic slowdown in Europe has "provided a big lift to the U.S. dollar, while the decline in crude oil has given additional momentum to the move," wrote Scotia Capital currency strategist Steve Malyon in a note to clients.
U.S. crude for October delivery was down nearly $7 dollars a barrel on the New York Mercantile Exchange as Hurricane Gustav appeared to have left oil installations in the Gulf of Mexico largely undamaged.
Many investors see falling oil prices as a key to economic recovery in the U.S., which would boost the greenback. And the U.S. dollar has tended to trade inversely to the price of oil.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) lowered its forecast for economic growth in Europe and raised its expectations for the United States.
The Paris-based group said it now expects the U.S. economy to grow 1.8% this year, up from the 1.2% forecast in June.
That compares to a reduced growth estimate of 1.2% for the 15-nation euro zone. In June, the OECD saw the euro zone economy growing at 1.7% this year.
The British pound fell to $1.7839 from $1.8218 on Friday.
The OECD lowered its forecast for economic growth in the United Kingdom to 1.2% from 1.8%, reflecting the nation's rapidly deteriorating housing market.
The British currency's slide "comes off the back of more bad housing news as mortgage approvals in the UK have fallen in July to their lowest level in at least the past 15 years," Malyon noted.
The dollar bought ¥108.83 Japanese yen, down slightly from from ¥108.82 on Friday.
The Japanese economy is now expected to grow at 1.2% this year, down from 1.7% in June, according to the OECD.
On Monday, Japan's Prime Minister Yasuo Fukuda resigned as the nation's economy appears to be headed for a recession. 
