EVENING REPORT-MAY 19

The dollar slipped to a 2-1/2 week low against a basket of major currencies on the worst U.S. consumer confidence reading in nearly three decades which raised concerns about stagflation. The surprisingly steep fall in U.S. consumer confidence slightly tempered market expectations for the Federal Reserve to raise interest rates later in the year. The Euro rose to its highest level since May 1 at $1.5632 there is a scope for relatively robust readings from key German sentiment surveys this week to support the Euro by reinforcing the case for the European Central Bank to leave rates on hold a while longer rather than cutting them .The greenback dropped to a 2-week low of 1.9623 against pound before reversing its early losses to trade at 1.9560 as the prices for houses in Great Britain increased 1.2 percent in May from the month before. Sellers were embolden by recent actions from the BoE to provide liquidity to the market. The dollar inched higher against the yen making up for some losses late last week when a plunge in Michigan index of consumer confidence stirred concerns about the outlook for the U.S economy. The Bank of Japan is widely expected to keep interest rates at 0.50 percent at a two-day policy meeting. The Australian dollar scaled a 24-year peak of $0.9564 boosted by firm commodity prices and better risk appetite and on expectations that domestic interest rates will stay high.