Dollar holds up well before data, Indonesia suffers

The dollar rose against the euro and surged to a three-week high versus the yen on Tuesday ahead of key US consumer confidence data that will start a busy week of economic releases.
Minutes of the Federal Reserve's August 9 meeting are also due and investors are keen to assess whether the central bank's monetary tightening policy has enough momentum left to push the dollar higher.
Meanwhile the yen was under pressure from high oil prices and turmoil in Indonesia whose currency, the rupiah, briefly plunged by almost 9 percent against the dollar to a four-year low because of fears of an economic crisis.
The rupiah later retraced losses after the central bank hiked interest rates by 75 basis points to 9.5 percent and took measures to tighten money supply.
"People are very uncertain about oil prices and what they mean. The yen is an easy target," said Ian Gunner, head of foreign exchange research at Mellon Bank.
Oil prices hit a record high above $70 a barrel on Monday due to the damage wrought by hurricane Katrina as it raged into the Gulf of Mexico and on to the US mainland.
By 1152 GMT, the dollar was a third of a percent up on the day at $1.2198 after briefly hitting a 12-day low against the single currency on Monday on high crude oil prices and rebounding later. The dollar was up 0.7 percent at 111.40 yen after hitting a three-week high at 111.60 yen earlier in the session.
Disappointing data out of Japan did little to shake expectations for a sustained recovery. Spending by wage earner households fell in July and the unemployment rate rose. But the ratio of jobs to applicants improved to its best since 1992.
Sterling fell to its lowest level in three weeks against the dollar after Bank of England data showed the lowest rise in mortgage lending in three years in July.
Mortgage lending rose by 6.45 billion pounds last month, compared with June's 7.06 billion rise and forecasts for a 7.1 billion increase. Net consumer credit also rose less than expected. "Sterling is consistent with recent weak data today and it's a clear story," said Adrian Foster, head of currency strategy at Dresdner Kleinwort Wasserstein in London.