Dollar declines after weak data, Swedish crown falls

Chicago (Oct 28)   The dollar fell on Tuesday on disappointing U.S. durable goods and home price data ahead of a Federal Reserve policy meeting.

The greenback, while weaker against most major currencies, fared better than the Swedish crown after Sweden's central bank surprised investors by cutting interest rates to a record low of zero. The crown fell to a four-year low versus the dollar.

Given recent signs of slowing in U.S. business activity and with inflation below the Fed's 2 percent target, analysts and traders widely expect the U.S. central bank to telegraph it would be unlikely to raise rates before mid-2015, although it will likely end its third round of quantitative easing.

The Federal Open Market Committee, the Fed's policy-setting group, begins a two-day meeting on Tuesday and is scheduled to release a statement at 2 p.m. (1800 GMT) Wednesday.

The U.S. Commerce Department said orders for big-ticket items such as airplanes fell 1.3 percent in September following an 18.3 percent plunge in August. Analysts had expected a 0.5 percent rise last month.

On the real estate front, S&P and Case-Shiller reported their index of home prices in 20 U.S. cities fell 0.1 percent in August, contrary to an expected 0.1 percent rise.

The dollar's decline was limited after the Conference Board said its index of U.S. consumer confidence, which some analysts see as a predictor of consumer spending, rose in October to its highest in seven years.

The dollar index, which gauges the greenback against a basket of six currencies, last traded lower at 85.32 after touching its lowest in four sessions.

The greenback briefly turned negative against the yen on the weaker domestic data but regained most of its earlier rise and was last up 0.2 percent at 107.97 yen, not far from Monday's nearly three-week peak of 108.38.

The dollar weakened against the euro, with the euro zone currency last around $1.27, up on the day.

On the other hand, the dollar rose as high as 7.3824 crowns, its highest since September 2010. It last traded at 7.3277 crowns, up 0.4 percent on the day.

Inflation in Sweden has undershot the Riksbank's 2-percent target for years and despite signs the economy is picking up, consumer prices have only risen one month so far in 2014 on an annual basis.

Now, with the main rate cut to zero, analysts said it would appear the Riksbank is running out of the usual tools to fight deflation.

Source:  CNBC