London: The dollar dipped against the euro today in lackluster pre-holiday trading, weighed down by new data underlining weaknesses in the US economy.

The single European currency in late-day trade was at USD 1.3991 after 1.3924 late yesterday in New York.

The dollar was meanwhile trading at 90.52 yen, down from 90.96 yesterday.

The US currency came under selling pressure on news that US incomes and spending contracted in November as recession took a heavy toll.

In the first decline in four months, personal income contracted 0.2 per cent in November, surprising analysts who had expected no change.

Consumption expenditures shrank 0.6 per cent in the month before Christmas, its fifth consecutive decline, the Commerce Department said.

But after adjusting for inflation and taxes, real disposable income in November increased 1.0 per cent, a second consecutive large monthly rise, and real personal consumption expenditure rose 0.6 per cent, the first monthly rise since May and the largest monthly increase since December 2006.

"Though the increase in real spending and income is encouraging, it is being driven by sharp declines in prices," said Ryan Sweet, a senior economist with Moody's Economy.com.

An accelerating decline in prices in recent months has stoked fresh concerns about deflation the pernicious downward spiral of falling prices and weakening growth that is difficult to counter.

"Household finances are still tight, and consumers are attempting to repair their balance sheets by saving more. The savings rate will trend higher, at the expense of spending," Sweet said.

 

Source : PTI