NEW YORK (AFX) -- The dollar moved broadly lower Tuesday, after a slate of weaker-than-expected U.S. economic reports prompted a modest bout of selling pressure.
The currency took a hit following a series of generally disappointing readings on housing, consumer confidence and Chicago purchasing managers index. Earlier, the U.S. currency had scant reaction to an in-line revision of U.S. fourth-quarter gross domestic product data.
'The dollar dipped lower because of these reports,' said Chuck Butler, president at Everbank World Markets. But 'it's just like one swallow doesn't make a summer. This batch of slower and weaker economic data doesn't necessarily mean the whole U.S. economy is slowing down.'
In late New York trading, the euro rose 0.6% to $1.1919, compared to $1.1846 late Monday.
The dollar was changing hands at 115.79 yen, down 0.4% from 116.21 yen late Monday.
The British pound was up 0.8% at $1.7535.
Mixed U.S. data
Earlier, the Commerce Department reported the U.S. economy grew at a 1.6% annual pace in the fourth quarter, a bit faster than the previous 1.1%.
Core inflation was a touch lower, the report said.
Also, the National Association of Realtors said resales of U.S. homes dropped 2.8% in January to a seasonally adjusted annualized rate of 6.56 million, the lowest in two years. Economists were expecting sales of about 6.65 million.
Separately, the Conference Board said U.S. consumer confidence ended a three-month gaining streak in February, falling to 101.7 from a revised January level of 106.8.
Lastly, data showed the Chicago purchasing managers index unexpectedly fell to 54.9 in February from 58.5 in January. Economists had forecast the Chicago PMI index to inch higher to 58.6.
David Sloan, an economist at 4Cast, said the fact that housing, consumer confidence and Chicago PMI all came in softer-than-expected painted 'a slightly negative picture.'
But in the bigger picture, recent economic data still point to solid economic growth and the markets remain primed for one more, and likely two more quarter-point Fed target rate increases, Sloan said.
'The dollar has got most of its support this year based on [the expectation] the Fed is going to raise rates a couple of more times,' Chutler said. 'As long as these economic reports keeping coming through showing a little bit weaker, that negates the need for them to continue raising interest rates. So whenever that comes through, we'll see a little move like this.'
Analysts said the dollar will remain trading in ranges in the first half of the year.
Upbeat data from Europe
The euro was boosted after generally positive economic data from the euro zone reinforced expectations that European interest rates will rise on Thursday.
Kathy Lien, chief fundamental analyst at Forex Capital Markets, said the dollar sold off against the euro and the British pound as European currencies were lifted by the better economic numbers from Europe.
'We had a really nice improvement in German employment data and we had a good French consumer confidence [report],' she said. 'Those numbers sort of overshadowed the in-line numbers [GDP] we had in the U.S.'
Euro-zone January CPI remained at 2.4% on an annual basis, the Eurostat statistics agency said Tuesday, confirming initial estimates.
And the euro-zone economic sentiment indicator for February rose to 102.7 from 101.5, inching ahead of consensus forecasts.
Elsewhere, German jobless on an adjusted basis fell 5,000 in February after a revised rise of 63,000 in January, a decline that wasn't as much as forecast. The seasonally adjusted unemployment rate was 11.3%.
In addition, French jobless rate rose to 9.6% in January from 9.5% in December, the first rise since May.
The European Central Bank meets Thursday, with uniform expectations for a quarter-point interest rate rise to 2.5%.
The post-rate decision press conference, however, will be closely eyed for signs as to how high the central bank wants to lift rates, said analysts.
Peter Stoneham, managing analyst at Thomson Forex Watch, said the market is conditioned to poor unemployment figures and that the rest of the data hasn't altered the view that European interest rates will rise on Thursday.
'There's a risk of accelerating growth in Europe, but a lot now depends on what the Fed is going to do,' he said.
Yen steadies
The yen stabilized after surging to multi-week highs against rivals in the prior session on mounting speculation that the Bank of Japan may soon end its ultra-easing monetary policy.
Markets will focus on Friday's consumer price index release in Japan, which will be key in shaping expectations for either a March or April BoJ policy shift, analysts said.
The euro last traded up 0.2% at 138 yen.
Elsewhere, the Canadian dollar soared to a fresh 14-year high Tuesday, boosted by a solid monthly GDP report.
The dollar was last down 0.3% at C$1.1365, having earlier touched a low of C$1.1349.
Canadian GDP rose 0.4% in December, exceeding expectations of 0.3%, driven by durable goods manufacturing, wholesale trade, transportation and warehousing.
But fourth-quarter GDP slowed to a 2.5%, roughly matching expectations of 2.7%, following a downwardly revised 3.5% in the third-quarter.
'The monthly GDP report fed into underlying CAD strength,' said Michael Woolfolk, senior currency strategist at the Bank of New York. 'With political risk subsiding, rising interest rates and fundamental economic strength are prompting CAD buying, which is expected to continue through year-end as USD/CAD heads for the 1.10 mark.'
The Canadian dollar was plagued by weak growth, a dovish central bank, falling crude oil prices and political turmoil surrounding Prime Minister Paul Martin late last year, Woolfolk said. This story was supplied by MarketWatch. For further information see www.marketwatch.com.