Dollar Drops as Report on U.S. Housing Reduces Safety Demand

By Oliver Biggadike and Anna Rascouet

Aug. 25 (Bloomberg) -- The dollar declined against major counterparts including the euro as a report showed home prices fell in June at a slower pace than economists forecast, discouraging demand for the currency as a refuge.

U.S. stock-index futures gained after equities erased advances yesterday as Atlanta-based SunTrust Banks Inc. said commercial real estate may falter through 2010. The dollar fell against the New Zealand dollar, reaching the lowest level in almost 11 months against the higher-yielding currency.

“There’s still a fair degree of optimism toward growth- sensitive currencies,” said Vassili Serebriakov, currency strategist at Wells Fargo & Co. in New York. “Currencies with higher nominal yields, especially those in the emerging-market space, are doing quite well.”

The dollar declined 0.3 percent to $1.4349 per euro at 9:17 a.m. in New York, from $1.4304 yesterday. The U.S. currency dropped 0.3 percent to 94.32 yen, from 94.57, and slid as much as 0.7 percent to 68.97 U.S. cents against New Zealand’s currency, the weakest level since Sept. 26. The yen traded at 135.37 per euro, compared with 135.27.

The S&P/Case-Shiller index of property values in 20 U.S. metropolitan areas decreased 15.4 percent in June from a year earlier after a 17 percent drop in the 12 months ended in May. The median forecast in a Bloomberg survey of 31 economists was for a 16.4 percent reduction.

The New York-based Conference Board will report its consumer confidence index increased to 47.9 in August, according to the median forecast in a separate Bloomberg News survey.

Futures on the Standard & Poor’s 500 Index rose 0.7 percent, and Germany’s DAX Index was 0.5 percent higher.

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Anna Rascouet in London at arascouet@bloomberg.net

Last Updated: August 25, 2009 09:20 EDT