Dollar gains after unexpected rise in US economic data

New York: The dollar rose against the yen yesterday after a government report showing an unexpected rise in durable goods orders eased worries over the US economy.

The solid reading lifted sentiment on stocks and spurred a recovery in risk appetite, putting pressure on the low-yielding yen. The dollar also pared some of its losses against the euro.

Durable goods orders were up 0.8 per cent in June, after a revised 0.1 per cent gain in May, the Commerce Department said. When volatile transportation orders were excluded, orders climbed two per cent last month, the sharpest rise since December.

"All in all, a strong piece of data for the US, in contrast with fresh signs of weakness in Europe and the UK," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "I think stocks will like it, yen crosses will too, and the dollar also."

In early trading in New York, the dollar rose 0.3 per cent to 107.72 yen.

The euro traded 0.2 per cent higher at $1.5700, still roughly three US cents below a record high set in mid-July. The euro also jumped 0.5 per cent to 169.05 yen.

Favourable signs

Despite getting a boost from the much-stronger-than-expected durable goods orders data, sentiment on the greenback remained cautious as market participants awaited more US data later in the day, including new home sales for June and a consumer sentiment poll for July.

Against a basket of six major currencies, the dollar remained 0.2 per cent lower at 72.791, retreating from Thursday's two-week high.

The Commerce Department's housing data will be closely watched after disappointing news on existing home sales released on Thursday sent the dollar down sharply against the yen.

But some analysts said that the scope for weak US data to hurt the dollar was limited as a fairly negative US picture is already priced in, and euro zone economic data has also been coming in on the weak side.

"The expectations are for lower readings across the board, but the impact of FX trade may depend on the degree of the decline," Boris Schlossberg, senior currency strategist at DailyFX.com, said.