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Dollar falls after weak US data cloud economic outlook

The dollar and short-dated US government bond yields dropped on Tuesday after worse than feared business activity surveys and home sales data sparked fresh concerns over the health of the US economy.

An index of the greenback against half a dozen peers fell 0.5 per cent in New York trading, reversing a powerful gain in the previous session. The euro, which is by far the biggest weight in the dollar index, rose 0.4 per cent to $0.9974, having earlier traded as low as $0.9901.

In fixed income markets, the yield on two-year US Treasuries, which reflect expectations for monetary policy, slid 0.08 percentage points to 3.25 per cent.

The falls mark a sharp reversal from the previous day when expectations that Federal Reserve policymakers will take a hawkish stance at this week’s economic symposium in Jackson Hole, Wyoming, sent the dollar and short-term bond yields rising.

Sales of newly built homes fell 12.6 per cent in July to an…

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