NEW YORK, Dec. 1 (Xinhua) -- The dollar fell against most major currencies on Tuesday upon rising U.S. pending home sales and other encouraging economic data.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, the National Association of Realtors (NAR)reported.
The index has risen for nine months in a row to its highest level since March 2006. It is 31.8 percent above October 2008. The rise from a year ago is the biggest annual increase ever recorded for the index.
Analysts have expected that pending home sales would fall slightly in October, as the government tax credit for first time home-buyers has been set to expire at the end of November.
The tax credit has been extended into next year. But NAR chief economist Lawrence Yun cautioned that home sales could dip in the months ahead, as time between when buyers start looking at homes until they close on a sale can take three to five months.
"Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process," Yun said.
The Institute for Supply Management (ISM) reported that its composite index for U.S. manufacturing sector fell by 2.1 points in November to 53.6. As the reading is above 50, it showed the manufacturing sector continued growing in November, at a slower pace though.
Both the production index and employment index weakened, while indexes for new orders and new export orders moved up. The pull back in the rate of production should not be viewed as a cause for concern as it primarily reflects further efforts to trim inventories, said analysts of Global Insight.
U.S. construction spending was unchanged in October, the Commerce Department reported. Strength in home building was offset by weakness in commercial real estate and public construction. Private construction rose 0.3 percent and public construction slipped 0.4 percent. Private residential building rose by 4.4 percent in a lagged response to past increases in housing starts.
The Bank of Japan (BOJ) announced that it will provide 10 trillion yen in short-term loans to commercial banks in an effort to combat the rising yen and growing deflation. The central bank made the announcement after it called an unscheduled meeting over the current economic situation on Tuesday.
The yen tumbled in Tuesday's Asian trading hours as investors speculated that the BOJ could decide to intervene the foreign exchange market on the meeting. The Japanese currency rebounded later as things did not turn out as expected.
The euro bought 1.5096 dollars in late New York trading compared with 1.4993 dollars it bought late Monday. The pound rose to 1.6641 dollars from 1.6424 dollars.
The dollar fell to 1.0438 Canadian dollars from 1.0570 Canadian dollars, and fell to 0.9990 Swiss francs from 1.0061 Swiss francs. It rose to 86.65 Japanese yen from 86.29 Japanese yen.
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