In the currency market, the dollar moved higher against the euro. Late Tuesday, the euro was trading at $1.4644 vs. $1.4752 on Monday.

The euro was hit by weakness in the German economy. The Munich-based Ifo Institute’s closely followed business sentiment index plunged in August, falling to a three-year low of 94.8 from 97.5 in July. Economists’ expectations had been for a more modest decline to 97.1.

Thus, “we believe the current dollar rally still has legs, we would recommend staying long dollars vs. the rest of the world,” wrote Win Thin, senior currency strategist at Brown Brothers Harriman.

The release of minutes from the FOMC’s August meeting present a much stronger sense of worry about growth than the Fed’s policy statement suggested when it was released just after the meeting ended.

Fed officials, the majority of whom voted to hold rates steady, saw a more-likely chance of a slowdown in economic growth in coming months than a pickup in inflation, and they believe that this slower growth should cool inflationary pressures.

The housing market remains grim, no matter how you slice it. U.S. home prices fell a seasonally adjusted 1.4% in the second quarter, the Office of Federal Housing Enterprise Oversight reported Tuesday. That was less than the 1.7% drop during the first three months of the year, however prices were down a record 4.8% in the second quarter of 2008, year over year.

Further complicating matters, a similar price index released by Standard & Poor’s earlier yesterday reported that home prices had fallen 15.4% in the second quarter on an annualized basis.

Source: Dollar Strengthens, Weak German Data Send Euro Lower