In the currency market, the dollar prolonged its upward arc against the euro. Late Monday, the euro was trading at $1.2452 vs. $1.2641 on Friday. For the time being the US dollar is perceived as the safest place for money fleeing just about every other financial sector.

“Fear continues to grip global markets and traders are piling into whatever safe havens they can find,” said James Hughes, of CMC Markets.

The dollar got a boost from a Commerce Department report showing that falling prices may be beginning to have an effect on the housing glut. Sales of new homes rose an estimated 2.7% in September to a seasonally adjusted annual rate of 464,000, in line with economists’ expectations. That was still 33% lower than September of 2007.

In addition, the inventory of unsold homes fell a record 7.3% in September, to 394,000, the lowest level in four years. However, it’s taking more than 9 months after completion for the typical new home to sell, an indication of how far apart supply and demand remain.

Finally, the report noted that the median home’s sales price fell to $218,400. That’s the lowest in four years, and represents a 9.1% drop in the past year.

But, as Marketwatch cautioned: “Government statisticians have low confidence in the monthly report, which is subject to large revisions and sampling and other statistical errors. In most months, the government isn’t sure whether sales rose or fell. The standard error in September, for instance, was plus or minus 12.1%.”

Source: Dollar smacks euro again -  New home sales rise as prices fall