Dollar Falls On Discouraging Economic Data

By Erin Conroy

NEW YORK -- The dollar fell against the major currencies Tuesday as new data showed that American consumers curbed their spending at a rate unseen in 28 years, while a survey showed German consumer confidence improving slightly despite the wider economic gloom.

The 15-nation euro bought $1.3022 in late New York trading, up from the $1.2877 it bought late Monday. The pound jumped to $1.5440 from $1.5115, while the dollar fell to 95.65 Japanese yen from 96.85 yen.

Both the Dow Jones industrial average and Standard & Poor's 500 index rallied for a third straight session Tuesday as investors were encouraged by government plans to help unfreeze credit markets. The U.S. Treasury Department and the Federal Reserve said they planned to provide $800 billion to aid consumer lending companies and to make mortgage loans cheaper and more available.

The dollar has tended this fall to move in the opposite direction from stocks. As equities plunged, the dollar has gained on the euro and the pound.

An updated reading on the economy's performance released by the Commerce Department showed the gross domestic product shrank at a 0.5% annual rate in the July-September quarter. American consumers slashed spending in the third quarter at a 3.7% pace. That was deeper than the 3.1% cut initially reported and marked the biggest reduction since the second quarter of 1980, when the country was in the grip of recession.

Also Tuesday, the Standard & Poor's/Case-Shiller U.S. National Home Price Index showed that home prices have tumbled to levels not seen since early 2004.