* Dollar rises on weak U.S. consumer confidence data
* Euro hits 2-week lows, dollar index at 2-week highs
* Markets look to more U.S. data, Norges Bank decision
(Updates prices, adds comment, changes byline)
By Wanfeng Zhou
NEW YORK, Oct 27 (Reuters) - The dollar rose to a two-week
high against the euro on Tuesday after a report showing U.S.
consumer confidence deteriorated sharply in October boosted the
greenback's safe-haven appeal.
The disappointing confidence data bodes ill for U.S. growth
because it indicates lower consumer spending, which accounts
for 70 percent of the economy. Without U.S. consumers, the
world economy is also unlikely to recover as swiftly as hoped.
"When the U.S. consumer is not likely to continue spending,
it means it's going to be a long, drawn-out type of recovery.
Nothing is going to happen overnight," said Dan Cook, senior
market analyst at IG Markets in Chicago. "So we see that drive
to risk aversion."
The Conference Board's U.S. consumer confidence index fell
to its weakest since July and well below forecasts. For story,
see []
The euro fell 0.6 percent to $1.4786 <EUR=> after hitting a
session of low $1.4771, its lowest since Oct. 13, according to
Reuters data. On Monday, the euro hit a 14-month high of
$1.5064 on electronic trading platform EBS.
The euro also fell 0.9 percent to 135.84 yen <EURJPY=R>,
pulling back from a more than two-month high hit on Monday near
138.49 yen.
"We're of the mind-set that the euro is a bit overextended.
Every single player in the market is long euros and we're
seeing a correction now," said Greg Salvaggio, senior vice
president of capital markets at Tempus Consulting in
Washington.
The ICE Futures dollar index <.DXY>, a measure of its
performance against six other major currencies, rose to 76.323,
a two-week high, well above a 14-month low of 74.94 hit last
week. It last traded up 0.3 percent.
Against the yen, the dollar fell 0.5 percent to 91.75 yen
<JPY=>.
OVERLY OPTIMISTIC
Analysts said one of the reasons for the dollar's
resilience is a heavy short position on the currency
accumulated the last few weeks, a sign that the greenback could
rebound in the near term. [].
In addition, recent U.S. economic figures, such as the
University of Michigan consumer confidence report and the
weekly jobless claims, have not met the market's expectations,
raising doubts about the health of the U.S. economy.
"The market is beginning to realize that the recovery
scenario priced into the current levels of risk assets may be
overly optimistic," said Boris Schlossberg, director of
currency research at GFT Forex in New York.
He added that Wednesday's U.S. durable goods data will be
the "next critical test of the economy's health" and could well
determine if the pullback in risk assets could be sustained for
the rest of the week.
The dollar also gained 0.4 percent against the Swiss franc
to 1.0229 francs <CHF=>, and was up against the New Zealand
dollar, which fell 0.7 percent to US$0.7421 <NZD=>.
Market participants also looked ahead to Wednesday's
interest-rate decision from Norway and Thursday's first
estimate for third-quarter U.S. gross domestic product data.
The Norges Bank is seen raising rates for the first time
since the global crisis hit less than two years ago.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Kenneth Barry)
