The dollar fell yesterday after disappointing US home sales data, but global equity markets edged higher on hopes for more stimulus from the European Central Bank and the prospect that stocks may be a better investment than other alternatives.
The less-than housing robust data fed worries the US economy might be losing momentum. Also feeding those concerns were data showing US consumer spending rose modestly in October while a key measure of business spending plans fell for a second straight month.
Sales of new US single-family homes rose for a third straight month last month, but a downward revision to September's pace of sales suggested the housing market's recovery would remain gradual.
The Commerce Department said sales gained 0.7 per cent to a seasonally adjusted annual rate of 458,000 units. Economists polled by Reuters had forecast a 472,000-unit pace last month.
“With the global backdrop being so weak, the onus is on the US data to be very strong,” said Chris McReynolds, head of US Treasury trading at Barclays in New York.
“Anytime it veers off that very strong course, people start decreasing their probability of a Fed move.” Weaker data raises the likelihood that the Fed will wait longer to hike interest rates.
The dollar index, a measure of the greenback's value against a basket of six currencies, fell to a session low of 87.520 before retracing to 87.659, down 0.30 per cent.
The euro rose 0.25 per cent against the dollar, to $1.2505. Against the yen, the dollar fell 0.27 per cent, to 117.65 yen.
MSCI's all-country world equity index rose 0.19 per cent to 427.54 points, and the pan-European FTSEurofirst index closed 0.02 per cent higher at 1,389.18.
European shares inched higher, with Germany's blue chip DAX index advancing for the 10th session in a row, as investors bet on further ECB stimulus. The DAX ended 0.6 per cent higher, enjoying its longest winning streak since May 2013.
The Dow Jones industrial average fell 11.91 points, or 0.07 per cent, to 17,803.03. The S&P 500 rose 2.49 points, or 0.12 per cent, to 2,069.52 and the Nasdaq Composite added 18.40 points, or 0.39 per cent, to 4,776.65.
Benchmark US Treasury yields fell to their lowest levels in over a month, while long-dated yields also hit more one-month lows on the weaker-than-expected US economic data and continued low yields in Europe.
The benchmark US Treasury 10-year note rose 6/32 in price to yield 2.2394 per cent.
German 10-year bunds fell to yield 0.73 per cent, just above a trough of 0.716 per cent hit in mid-October.
Oil prices were slightly lower after earlier tumbling to near four-year lows as traders grew increasingly convinced that OPEC would hold off making any major production cuts this week.
Benchmark Brent futures were down 10 cents at $78.230 a barrel. US crude was down four cents at $74.05 a barrel.