Dollar falls on EU summit, weak U.S. economy

The U.S. dollar fell against most major currencies this week, as the upcoming EU summit lifted the confidence on the eurozone debt crisis and mixed economic data suggested the recovery of U.S. economy was still weak. The international community has been calling on the European officials recently to come up with a package of reforms to boost the size of the European Financial Stability Facility this weekend. The European leaders are expected to meet this weekend to discuss how to resolve eurozone debt crisis, as German Chancellor Angela Merkel warned that there is no quick way to resolve all the issues surrounding the debt crisis. A joint statement on Thursday from Germany and France said no final decision would be made at the EU summit this weekend, but could be done until next Wednesday at the latest. The rating agency Moody's warned that France might lose its triple-A rating due to pressure from its public finances and global financial crisis. The news added investors' concerns about the eurozone debt crisis and weighed on the euro. On Thursday, the Greek parliament passed additional austerity measures, including pay and staff cuts in the civil service and pension cuts. The news helped to restore investors' confidence on the country's fiscal status and supported the euro. The shared currency barely changed against the dollar this week, traded 1.389 dollars per euro on Friday. U.S. Federal Reserve Chairman Ben Bernanke said Tuesday that central banks may need to resort to monetary policy to combat asset bubbles, which diminished investors' expectations of further easing monetary policy. The Fed's Beige Book of September showed that the U.S. economy slightly improved in most sectors, while consumer spending also rose slightly. The news helped to boost investors' confidence on the U.S. economy. However, the U.S. economic data remained mixed this week, which also affected the dollar. Manufacturing activities stayed weak in New York region in October. The Empire State index fell to -8.5 in October, only slightly better than -8.8 in September, according to the Empire State manufacturing survey released Monday by the New York Federal Reserve. The factory activity in the U.S. Mid-Atlantic region, however, expanded surprisingly in October as the Philadelphia Federal Reserve Bank said its business activity index jumped to 8.7 from -17.5 in September. The U.S. Labor Department said the consumer price index rose 0.3 percent in September, bolstered by rising gasoline and groceries prices. The Commerce Department said housing start rose 15 percent to 658,000 in September, suggesting the housing markets may pick up momentum. However, existing home sales were still week as the National Association of Realtors reported existing home sales fell 3 percent to 4.91 million homes in September, well below economists' estimation of 6 million. The job markets slightly improved as the U.S. Labor Department said initial jobless claims dropped 6,000 to 403,000 last week. The dollar fell amid mixed news from Europe and economic data. The dollar index lost 0.5 percent this week. The British Office for National Statistics reported that consumer prices in Britain rose 5.2 percent in September, up from 4.5 percent in August. The rising inflation raised investors' speculations that Britain's central bank may consider a tighter monetary policy. The British pound trimmed losses against the dollar in late trading on Tuesday. The minutes of the British central bank's latest monetary policy meeting showed that all members of the Monetary Policy Committee agreed to purchase additional 75 billion British pounds of assets over the next four months. The British pound gained 0.82 percent against the dollar this week. The dollar also fell 1.3 percent against the Japanese yen and dropped 1 percent against the Swiss franc this week.