Euro Rallies As US Housing Market Slumps

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The euro fought back against the dollar on Friday as another round of disappointing US housing figures fueled concerns that the US economic recovery may peter out after robust growth in the last quarter of 2009.

Still, concerns about the Greek debt situation continued to plague the euro, limiting its move away from a recent 9-month low against the greenback.

Greece has pushed back its plans to sell a minimum $2 billion in global bonds in the US and Asia. Meanwhile, reports surfaced indicating that European Union officials are demanding that Greece urgently adopt another 4 billion euro worth of austerity measures.

The euro rose to 1.3660 versus the buck, more than two cents from a 9-month low seen last week.

However, the euro crept away from a yearly low against the yen, improving slightly to 121.40. The euro briefly touched below 120 yesterday.

The euro rose sharply to a monthly peak of .8970 against the broadly weaker sterling, which has been plagued by deepening concerns about the UK financial system.

Euro area annual inflation rose to 1% in January from 0.9% in December, Eurostat said in a final report released on Friday. With prices in check, the European Central Bank has a free hand to keep interest rates at low levels to support the struggling eurozone economy.

British consumer confidence improved for the second month in February, the results of a closely watched survey show.

House prices in the U.K. fell 1% month-on-month in February, the Nationwide Building Society said Friday. That was the first fall in ten months. Economists had forecast 0.4% rise following a revised growth of 1.4% in January.

Back in the US, sales of previously owned homes dropped again in January, adding to the sharp decline seen in the final month of last year.

Looking back, economic activity in the fourth quarter expanded by more than previously expected, according to a report released by the Commerce Department on Friday, with the upward revision partly due to a smaller than previously expected drop in inventories.

The report showed that gross domestic product increased at an annual rate of 5.9 percent in the fourth quarter compared to the advance estimate of 5.7 percent growth.

(Market News Provided by RTTNews)