By FX Empire.com

Pessimism spread through markets after the EU finance minister due Wednesday was canceled, although the EU summit will go as planned. Moreover, mixed earnings and weak economic fundamentals from the United States spread pessimism in markets.

The S&P/CaseShiller house price index showed that house prices fell in August below forecasts, while the U.S. Conference Board’s consumer confidence index fell to the worst level in more than two years, which spread a strong wave of pessimism over the outlook of the U.S. economy.

Meanwhile, the Bank of Canada left the benchmark interest rates unchanged at 1.00%, and revised their growth projections for 2011 and 2012 lower. The BOC also expects inflation to ease until mid 2012 to reach 1%, which sparked projections of an upcoming rate cut by the BOC, and sent the Canadian dollar lower against major currencies.

The U.S. dollar was slightly higher against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 76.20, compared with the opening level at 76.16. The Euro fell slightly against the Dollar, where the EUR/USD pair traded around $1.3904, compared with the opening level at $1.3920, the British Pound also fell against the Dollar, where the GBP/USD pair traded around $1.5974, compared with the opening level at $1.5996, the U.S. dollar fell against the Japanese Yen to hit a new record low, where the USD/JPY pair was trading at 75.85, compared with the opening level at 76.20, and the U.S. dollar rose against the Canadian dollar, as the USD/CAD pair traded around 1.0167, compared with the opening level at 1.0035.

Stocks in the United States were lower by opening on Tuesday, as the Dow Jones Industrial Average was down by nearly 0.90% to trade around 11,804, while the S&P 500 index was down by nearly 1.10% to trade around 1240. European stock indexes were mixed before closing on Tuesday, where FTSE 100 was down by nearly 0.40% to trade at 5527 and the DAX was up by nearly 0.05% to trade around 6058.

Gold prices extended the gains on Tuesday to trade now around $1685 an ounce and crude oil prices also gained to trade around $93 a barrel.

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