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The dollar fell against most of its major peers before a report that’s predicted to show new home sales in the U.S. slumped in May, bolstering the case for the Federal Reserve to keep interest rates at a record low.
Purchases of existing U.S. homes decreased 5% to a 4.8 million annual rate in May, the weakest since November, according to the median forecast of economists. April home prices fell 0.3%, the Federal Housing Finance Agency will say tomorrow, according to projections in a separate survey.
Fed Vice Chairman Janet Yellen said June 9 that a “long, drawn-out recovery” was likely for the U.S. housing market. “For its part, the Federal Reserve will continue to use its policy tools to support the economic recovery,” she said.
The dollar weakened to an almost one-week low versus the euro before Fed policy makers begin a two-day meeting amid signs the U.S. economy is slowing. The 17-nation currency rose as European leaders said a Greek default can be avoided and before Prime Minister George Papandreou faces a confidence vote today. It pared gains after a report showed German investor confidence fell.
The pound weakened 0.3 percent to 88.58 pence per euro and was little changed at $1.6195 as Bank of England Markets Director Paul Fisher said further bond purchases to stimulate the economy are possible.
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