* Dollar falls vs euro as market eyes data, Fed meeting
* Euro boosted by strong French consumer data
* Geopolitical jitters, M&A talk support Swissie
(Updates prices, adds quotes, changes dateline, changes
byline)
By Steven C. Johnson
NEW YORK, June 24 (Reuters) - The dollar fell against the
euro on Tuesday after strong French consumer data eased worries
about the euro zone economy and investors braced for U.S. data
expected to show declines in housing and consumer confidence.
Analysts said signs of continued housing weakness and an
increasingly gloomy U.S. consumer will make it hard for the
Federal Reserve to pave the way for higher interest rates at
the close of a two-day policy meeting on Wednesday.
"People had expected tax rebates to lift the U.S. economy
and lead it into a sustained recovery, but that story is
running into some stiff headwinds," said David Watt, currency
strategist at RBC Capital Markets in Toronto.
"It's pretty clear U.S. consumers are retrenching, and in
that atmosphere, how hawkish can the Fed really be?"
The Conference Board will release its June consumer
confidence survey at 10 a.m. (1400 GMT), and economists polled
by Reuters expect it to fall to its lowest since 1992.
The April S&P/CaseShiller house price index, expected to
show a sharp decline in home prices in 20 metropolitan areas,
is due at 9 a.m. (1300 GMT).
Early in New York, the euro was up 0.3 percent at $1.5565
<EUR=>, having recovered most of the losses sustained in the
wake of Monday's weak euro zone data. The euro also rose to an
11-month peak at 168.26 yen <EURJPY=> before easing to 167.94,
up 0.4 percent on the day.
The dollar edged up 0.1 percent to 107.90 yen <JPY=> but
fell 0.5 percent to 1.0396 Swiss francs <CHF=>, with the
Swissie benefiting from talk of Swiss bank UBS <UBSN.VX> being
a potential big target for HSBC <HSBA.L>.
Traders said the safe haven franc was also bought on market
talk of a strike on Iran's nuclear sites -- but the rumors were
denied by a senior Iranian nuclear official [].
The biggest monthly rise in French consumer confidence in
4-1/2 years helped boost the euro and strengthened expectations
that the European Central Bank will hike interest rates to 4.25
percent next month to combat inflation.
The outlook for the Fed is foggier. Markets widely expect
the U.S. central bank to hold rates at 2 percent this week but
will watch to see what clues are offered about the possibility
of rate hikes later this year.
Surging energy and food prices have forced other central
banks in the developed and developing world to raise rates in
recent months, and the ECB is likely to follow suit in July.
But Watt said the Fed "looks completely cornered for now,"
with the economy going through a protracted slowdown even as
inflation pressures rise.
In a note to clients, UBS analysts said they expect "this
week's FOMC meeting to disappoint the market's expectation of
three U.S. rate hikes before the end of the year."
They said an ECB hike could push the euro back toward the
$1.60 area, just below an all-time high set in late April.
"This will also drag euro/yen up as the Bank of Japan, like
the Fed, is unlikely to raise interest rates," they wrote.
(Additional reporting by Toni Vorobyova; Editing by Chizu
Nomiyama)
