Consumer confidence plunged to the lowest in almost three years in December as unemployment rose and above-target inflation squeezed household budgets. Officials have warned the crisis in the euro area may hurt the U.K. economy, as the government refuses to compromise on the pace of its deficit-reduction plan.

US Dollar

Federal Reserve Chairman Ben S. Bernanke finally may be catching a break as his easy-money policies are showing signs of speeding up the economic rebound three years after interest rates were cut to zero. The housing sector may be nearing a bottom as record-low mortgage rates tempt more buyers into the market and confidence among homebuilders climbed to the highest since May 2010. Car manufacturers, another part of the economy sensitive to interest rates, are reviving, with carmakers reporting in November their highest sales pace in more than two years. Banks also are starting to put more of their money to work, expanding commercial and industrial loans last quarter by the most since September 2008.

Euro

The euro fell against most of its major peers amid concern that European Central Bank measures to support its banking sector may drive down borrowing costs for governments while weakening the value of the region’s currency. The 17-nation currency erased its advance after the Ecb said it had awarded 489 billion euros in 3 years to banks, more than the 293 billion euros forecast by economists, as investors bet the euro-region debt crisis is far from done.

Yen

The Yen reversing earlier losses against the Euro after bigger-than-expected ECB loans to region’s banks failed to boost investors’ confidence. The single currency against the Japanese Yen initially moved up toward a 1-week high of 102.52 but couldn’t sustain gains and retreated. Asian currencies strengthened, led by South Korea’s won, as housing data in the U.S. beat economists’ estimates, brightening the export outlook.

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