The dollar rose modestly against most currencies on Tuesday in thin, pre-holiday dealings but posted larger gains against the British pound on news of a sharp November fall in UK house prices. Sterling fell nearly 1 percent against the dollar after a survey showed the drop in house prices had accelerated in to its steepest rate since the recession of the early 1990s.
The dollar's gains versus sterling helped lift it against other currencies as well, but dealers said trade was thin.
"People are just buying what they need to buy," said Meg Browne, currency strategist at Brown Brothers Harriman in New York.
"The risk/reward is not favourable at this time of year. People know that liquidity will have dried up, and most would have gotten things done ahead of time," she said.
Late afternoon in New York, euro/dollar was down 0.20 percent at $1.3361, about a cent below record highs set earlier in December.
"Above $1.34 in the euro, there just doesn't seem to be any life at the moment," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.
"Real money sellers seem to come out at this level. I just think that people look at $1.34, as we approach the end of the year, as a reasonable opportunity to sell euros and take some profits." he added.
Against the yen, the dollar climbed to 104.35 yen, a rise of 0.3 percent in the session.
The dollar was 0.44 percent higher against the Swiss franc at 1.1535 francs.
Against the Canadian dollar, the dollar was up 0.20 percent at C$1.2313. The Canadian dollar earlier had firmed modestly on news retail sales had risen a more-than-expected 1.4 percent in October.
Sterling dropped to $1.9270, down 0.95 percent. The euro also rose smartly against sterling, gaining 0.8 percent to 0.6936 pounds.
After soaring to over $1.95 in early December from $1.78 just two months earlier, the pound has been consolidating between $1.90 and $1.95 in recent weeks.
The pound began to run out of steam on views that the Bank of England would slow its interest rate tightening cycle in the wake of some soft economic data. But Brown Brothers Harriman's Browne said sterling still offered relatively high yields, which might prove enticing to investors.
In Germany, the president of the Ifo economic research institute on Tuesday said the European Central Bank should intervene in the foreign exchange market to weaken the euro against the dollar, but analysts were sceptical.
"Unless the (euro/dollar) pair reaches the $1.40 barrier soon after the New Year, we doubt that the ECB will act," said Boris Schlossberg, currency strategist at Forex Capital Markets in New York.
"Although the unit's rise has certainly caused some hardship for the region's exporters, it has also had several positive effects on the EU economy, most notably from the ECB's point of view, a moderating influence on inflation," he added.
On Wednesday, the US government will release its final reading on third-quarter gross domestic product. A Reuters poll of economists produced a median forecast of 3.9 percent growth, unchanged from the government's previous Q3 estimate.
In Japan, the government will release its October tertiary sector activity index, which measures conditions in the service sector. It is expected to be flat. Japanese trade data for November also will be released.
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