By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar edged lower versus most major rivals Tuesday, proving vulnerable to short-term profit-taking amid thin holiday trading conditions, analysts said.
The dollar index (DXY 77.53, -0.11, -0.14%) , a measure of the greenback against a trade-weighted basket of major currencies, fell to 77.485 from 77.618 in North American trade late Monday. Last week, the index reached its highest level since September.
British markets reopened Tuesday after a four-day holiday. U.S. and European markets will be closed this coming Friday for New Year's Day.
"With just a three-day week in which to get involved, most investors will choose to keep their powder dry," wrote strategists at Moneycorp, a foreign-exchange broker. "The risk for the dollar is of year-end profit-taking."
A move to fresh 2009 highs for several stock indexes may also be weighing on the greenback, which for much of the year has tended to lose ground as equities and other assets have gained as investors' appetite for risk has increased.
The euro traded at $1.4427, up from $1.4387 on Monday. The euro had started the month above the $1.50 level.
Regional consumer-price-inflation data in Germany showed some further signs of rising prices in Europe's largest economy, news reports said.
The state of Brandenburg in eastern Germany reported a 0.8% monthly rise in December, boosted by a 23% jump in prices for lodging and a 19% increase in prices for package holidays, Dow Jones Newswires reported. That confirmed a trend reported in Hesse and North Rhine Westphalia.
Overall German consumer inflation is expected to show a 0.6% rise in December after a 0.1% decline in November, according to a Dow Jones Newswires survey of economists. On an annual basis, inflation is expected to show a 0.7% rise from December 2008.
The European Central Bank has said it expects inflation to begin picking up across the euro zone in coming months but still sees annual inflation below its target of just below 2%.
The British pound traded at $1.5989 versus the dollar, down 0.1% from Monday.
The dollar managed to edge higher versus the Japanese yen, to 91.72 yen from 91.59 yen late Monday.
Traders will be watching data on U.S. house prices and consumer confidence on Tuesday.
The Conference Board's December consumer-confidence index, scheduled for release at 10 a.m. Eastern, is expected to rise to 54.0 from 49.5 in November, maintaining a narrow range in place since May, according to a survey of economists by MarketWatch. Read more about this week's U.S. data.
Ahead of that, Case-Shiller home prices for October will be released at 9 a.m. Eastern.
