Dollar rises as crude oil declines on low demand

The dollar rose against the euro on speculation a drop in oil prices will support growth in the world's largest energy consumer. The greenback traded on a high versus the yen following the biggest decline in crude costs in more than three years. The euro fell against the yen before a survey tomorrow that may show business confidence in Germany slid to the lowest since 2005, German business confidence will discourage the European Central Bank from raising interest rates. ``Oil prices have come off the boil and that has done quite a lot to help the dollar,'' said Akio Shimizu, chief manager of foreign exchange trading at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. ``It does relieve some concern that the economic outlook will deteriorate.'' The EUR/USD is currently trading at $1.4747 as of 7:31 am, GMT.

Sales of existing houses in the U.S. probably rose in July from a 10-year low as declining prices helped stabilize demand, economists said before a report today. Record foreclosures have pushed property values down even more, luring some bargain hunters into the market. Still, tougher lending rules, rising unemployment and a glut of unsold houses signal the outlook for residential real estate remains grim. ``Housing is searching for a bottom, but we are probably not there yet,'' said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. ``Buyers are showing some interest because of the price declines.''

The British pound may extend its decline to $1.8300 in the next two weeks after the currency closed on Aug. 22 below so-called support at $1.8620, said Pak Lai Ng, a technical analyst at Forecast Pte Ltd. in Singapore. Momentum indicators such as the stochastic oscillator chart signal the pound may continue to weaken even as they show the currency is ``a bit oversold,'' Ng said. ``It could stay oversold for a long time.'' The GBP/USD is currently trading at $1.8458 as of 7:40am, GMT.

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