Slump in consumer confidence drives dollar to fresh lows

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The Independent Online

The dollar fell to a fresh low against the euro yesterday after a slew of US economic figures pointing to fragile consumer confidence and subdued manufacturing activity.

The dollar fell to a fresh low against the euro yesterday after a slew of US economic figures pointing to fragile consumer confidence and subdued manufacturing activity.

Despite the morale-boosting capture of Saddam Hussein, the US consumer confidence index slipped in December while, unexpectedly, the annual rate of home sales also fell. The closely watched Chicago Purchasing Managers Index, which measures manufacturing activity, dipped by 5 percentage points from November's level.

The weaker-than-expected snapshots of industrial and consumer confidence combined to help send the dollar to a new low against the euro of $1.2530.

The US currency was also down against a range of European and Far East currencies, with the pound hitting a fresh 11-year high against the dollar of $1.7800. The Dow was down about 25 points.

The US Conference Board consumer index fell from a revised 92.5 per cent in November to 91.3 in December. Consumer confidence also remains subdued on this side of the Atlantic, according to the latest snapshot. Reflecting the apparent poor start to the Christmas season on the high street, researchers at Martin Hamlin GfK said its consumer confidence barometer stood at minus five in December, in line with market expectations.

Although this was up from the minus six recorded in November, when the Bank of England raised interest rates for the first time in nearly four years, the research company struck a downbeat note. "Consumers are still cautious about spending money on major purchases, even during the Christmas season when they are usually shopping more frequently," Roger Wright, a Martin Hamlin director, said.

Consumers' confidence in their own financial situation improved slightly from minus two to zero while confidence in the general economic situation rose from minus 24 in November to minus 22.

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