Dollar hits fresh daily lows after consumer confidence plummets

LONDON - The dollar touched new daily lows against other major currencies after a key consumer confidence indicator in the US fell sharply.
The Conference Board confidence index fell to 64.5 in March from 76.4 in February and well below the 73.0 expected by analysts. The component that measures expectations for the next six months dropped to its lowest level in 35 years.
Earlier, the Case-Shiller index of house prices in 20 US cities revealed a 10.7 pct annual drop in January.
"With the rate of decline in house prices accelerating, this may not even be the bottom for confidence," said Paul Ashworth at Capital Economics.
And to add to the worries of US rate-setters, the Conference Board's survey showed year-ahead inflation expectations jumped to 6.1 pct from 5.4 pct, suggesting the anchoring of price expectations is coming undone.
The data reminded investors that the Federal Reserve continues to face the unappetizing mix of a recession and higher inflation. Whether is opts to cut interest rates lower than its current 2.25 pct or allows the economy to weaken in order to keep price stability, the situation remains negative for the dollar, analysts said.
The dollar fared worst today against the yen, which typically strengthens as global risk appetite wanes, and remained stable against the euro and pound.
The dollar lost substantial ground earlier today as trading picked up after the long Easter weekend in Europe, in part making up for big gains last week.
The five-fold increase in the bid from JP Morgan Chase for Bear Stearns and positive existing home sales data yesterday caused stock markets to rise, suggesting the economic downturn may have bottomed out for the US.
"The key is to distinguish between bear market rallies -- a typically occurrence of down markets -- and extended rebounds, which could mark the beginning of the end of the bear market," said Ashraf Laidi, chief forex strategist at CMC Markets.
Laidi noted that the market's focus is on systemic risk -- the sharp falls in credit liquidity leading to write-downs and failures in the financial sector.
The fallout of the current crisis, with rising unemployment and weaker consumer spending, will continue to weigh on the economy and stock markets, he said.
The performance of the dollar compared with the euro and yen will most likely come down to the extent to which economies beyond the US feel the economic consequences of a US recession.
London 1445 GMT London 1238 GMT
US dollar
yen 99.69 down from 100.27
sfr 1.0089 down from 1.0101
Euro
usd 1.5585 up from 1.5578
stg 0.7805 down from 0.7815
yen 155.41 down from 156.23
sfr 1.5723 down from 1.5736
Sterling
usd 1.9967 up from 1.9930
yen 199.15 down from 199.82
sfr 2.0151 up from 2.0130
Australian dollar
usd 0.9120 down from 0.9146
stg 0.4568 down from 0.4588
yen 90.98 down from 91.68