Dollar in doldrums amid US economic concerns

TOKYO: The dollar was in the doldrums in Asia on Tuesday although it resisted further falls after losing ground overnight due to concerns about the US economic recovery.

The dollar was quoted at 86.97 yen in Tokyo afternoon trade, recovering slightly from 86.68 in New York late Monday.

The euro fetched 1.2968 dollars compared with 1.2943 dollars. Against the Japanese currency the euro rose to 112.78 yen from 112.18.

The dollar slipped in New York as a pessimistic report Monday on the US home-building industry added to concerns that economic recovery in the world's largest economy could stall.

The National Association of Home Builders' monthly index gauging confidence in new-home sales fell to a 15-month low of 14 points in July, down from 16 in June. Any reading below 50 signals market conditions are poor.

The dollar's fall came to a halt in Tokyo but the greenback is still weak, said Mizuho Corporate Bank market economist Daisuke Karakama.

"Currency rates are not moving on news from Europe or Japan now.... Everyone is paying heed to worrying signs in the US economy," he said.

Investors also retreated to the sidelines ahead of the release later this week of the results of "stress tests" of European banks, Karakama said.

The tests are to determine if the banks are strong enough to withstand fresh shocks or need more capital.

Barclays Capital chief Japan strategist Masafumi Yamamoto said investors would pay attention to US firms' earnings reports such as that of Goldman Sachs and economic reports including housing data due this week.

Hedge funds have aggressively sold the dollar recently on the back of weaker-than-expected economic reports, suggesting the currency is now undervalued, he said.

If there is a positive surprise in any of the US events this week, the dollar could rise sharply, he told Dow Jones Newswires.

The dollar was mixed against most Asian currencies. It slipped to 1.3734 Singapore dollars from 1.3802 on Monday, to 32.12 Taiwan dollars from 32.16, and 46.40 Philippine pesos from 46.47.

The greenback rose to 9,054.50 Indonesian rupiah from 9,030 while staying flat at 32.29 Thai baht.