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The dollar made a comeback in afternoon dealing versus most major counterparts on Monday as stocks dropped into negative territory despite encouraging corporate earnings and economic news. With the steam gone out of the rally in equities, the dollar, still the world's de facto reserve currency, has found support among traders looking for a safe haven.
Economic data released over the past few days has sent a mixed message about the health of the US economy. While the economy grew more than expected in the third quarter and the housing downturn appears to have bottomed out, anxiety remains among the American consumer, once the engine of the global economy.
The dollar jumped about a penny from its early lows against the euro, rising back to 1.4765. The pair has had trouble sustaining any direction over the past few days, as the dollar attempts to rebound from a 14-month low of 1.5059 set a week ago.
The dollar also continued its run of choppy trading versus the sterling, improving by a cent to 1.6360. Still, the pair seems destined to remain in its stubborn range between 1.5700 and 1.6700 until traders are more clear about the outlook for the global economy.
Should the economic recovery begin to take hold, the dollar could see losses against higher-yielding currencies.
On the flip side, the buck came off its early highs versus the yen, easing back to the 90 mark. A month ago the dollar slipped below 88 for the first time since January, testing a 1995 low of 87.08.
Pending home sales rose for a record straight eighth month in September, according to a report released by the National Association of Realtors on Monday, with the pending home sales index rising to its highest level since December of 2006.
The report showed that the pending home sales index rose 6.1 percent to 110.1 in September from a reading of 103.8 in August.
The Institute for Supply Management released its report on manufacturing activity in the month of October, showing that activity expanded for the third consecutive month amid a jump in production and employment.
The ISM said its index of activity in the manufacturing sector rose to 55.7 in October from 52.6 in September, with a reading above 50 indicating growth in the sector.
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