NEW YORK (MarketWatch) — The U.S. dollar edged up Tuesday against most major rivals as investors examined economic data and speeches from Federal Reserve officials for insight into when the central bank could begin to slow its monthly asset purchases.
Consumer Data Key To Wall Street on TuesdayWall Street traders will have a keen eye on consumer confidence Tuesday. Plus, plans are set for the highest-level engagement between the U.S. and Iran at the U.N. in more than 30 years. Photo: Getty Images.Home prices increased 1.8% in July, down from 2.2% in June, according to a gauge from S&P/Case-Shiller on Tuesday. The seasonally adjusted July gains were 0.6%, the lowest since September, with pressure likely coming from higher mortgage rates. A separate home-price report from the Federal Housing Finance Agency showed a seasonally adjusted increase of 1% in July.
Also released Tuesday, the Conference Board's consumer-confidence gauge for September fell to 79.7 from a revised 81.8 in August on labor-market worries. Economists had expected a decline in the index to 79.5, according to a MarketWatch poll.
Among major pairs, the British pound (GBPUSD) fell to $1.579 from $1.6047 late Monday while the euro (EURUSD) edged down to $1.3475 from Monday's level of $1.3493.
/quotes/zigman/4867933/sampled EURUSD 1.3493, 0.0000, -0.0030% Euro vs. dollar
The market has become a "data junkie searching for direction," said Scotiabank analysts led by Camilla Sutton in a note Tuesday.
The Fed last week determined the economy wasn't strong enough to start reducing monetary stimulus and decided to keep buying $85 billion in securities each month, a stance considered negative for the dollar.
In the euro zone, German business sentiment was slightly better in September, with the Ifo business-confidence index inching up to 107.7 from a revised 107.6 in August. But the increase was less than economist expectations of a rise to 108.0 in September.
The business-sentiment data are the latest to show the "growing discrepancy" between the improvement in euro-zone domestic demand and weakness in the export sector, said Valentin Marinov, a strategist at Citi, in a note on Tuesday.
"All that could keep concerns about the viability of Eurozone's export-based growth model in place," he wrote. "In turn, this could keep the [European Central Bank's] growth assessment quite cautious next week, resulting in potential headwinds for the euro in coming days."
On Monday, ECB Mario Draghi said the central bank could consider increasing stimulus in order to protect economic recovery and maintain interest rates at suitable levels. The potential additional stimulus could come in the form of long-term refinancing operation, or LTRO, loans, he said in testimony to the European Parliament.
The ICE dollar index (DXY) , which measures the greenback against a basket of six rival currencies, rose to 80.583 from 80.452 late Monday in North America.
The WSJ Dollar Index (XX:BUXX) , which uses a wider comparison basket, increased to 72.99 from 72.88.
The dollar indexes had fallen Monday after two Fed officials offered downbeat views of the pace of U.S. economic recovery. Atlanta Fed President Dennis Lockhart said the economy is losing some of its dynamism, while New York Fed President William Dudley said the economy was too weak for the central bank to reduce bond buying.
The dollar stumbled against major rivals after the Fed's decision to hold monetary policy steady, and the "Fed's dovish tone gave some breathing space to emerging-market currencies which were sold-off heavily due to capital flight fears," said analysts at IS Investment in a report Monday.
The Brazilian real (USDBRL) , the Turkish lira (USDTRY) and the Malaysian ringgit (USDMYR) were among emerging-market currencies that advanced against the greenback after the Fed decision.
The Fed also said last week that rising mortgage rates and reduced federal spending could slow improvement in the economy.
Tapering of asset purchases by the Fed may be postponed to the start of 2014, said IS Investment. "However, the markets will increasingly react to the U.S. data, in our view. Besides the unemployment rate, data including inflation and bank-loan growth are likely to create volatility in the following weeks."
The closely watched monthly U.S. employment report is due out Oct. 4.
In other trades Tuesday, the dollar (USDJPY) bought 98.60 Japanese yen, lower than ¥98.77 on Monday.
But the Australian dollar (AUDUSD) fell to 93.74 U.S. cents from 94.39 U.S. cents, wiping out gains built after HSBC on Monday said its gauge of manufacturing activity in China jumped to a six-month high in September. Australian assets tend to be sensitive to data from China, Australia's largest trading partner.