BLBG: Dollar Rises to Two-Week High on Sign of U.S. Economic Recovery
By Ben Levisohn and Paul Dobson
April 23 (Bloomberg) -- The dollar advanced to a two-week high versus the yen as a government report showed orders for durable goods excluding transportation items surged last month by the most since the recession began in December 2007.
The euro erased an earlier gain versus the dollar and traded within a U.S. cent of the lowest level in almost a year on concern Greece’s request for emergency funding will make the 16-nation currency less attractive. The dollar was headed for its first five-day rally in three weeks versus the yen on evidence of a U.S. economic recovery.
“The core number was very strong, and that’s driving dollar-yen higher,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey, referring to the durable- goods report. “Greece will be a long, drawn-out drama. Until the money starts to flow, it will weigh on the euro.”
The dollar increased 0.7 percent to 94.14 yen at 9:19 a.m. in New York, from 93.49 yen yesterday, after reaching 94.23 yen, the highest level since April 7. The euro traded at $1.3281, compared with $1.3295, after touching $1.3202, the lowest level since April 30, 2009. The euro advanced 0.6 percent to 124.98 yen, from 124.28 yen.
Bookings for durable goods excluding transportation items increased 2.8 percent last month after a 1.7 percent gain in February, the Commerce Department reported. The median forecast of 75 economists in a Bloomberg News survey was for a 0.7 percent advance.
‘Growing Bloc’
The dollar earlier rose versus the yen as CNBC, citing Federal Reserve sources that it didn’t identify, reported that a “growing bloc” of policy makers favor sales of assets. The central bank is due to release its statement next week.
Greece called for activation of a financial lifeline of as much as 45 billion euros ($60 billion) this year in an unprecedented test of the euro’s stability and European political cohesion.
The nation’s problems are testing the euro’s status as a reserve currency, according to Adam Cole, head of global currency strategy at Royal Bank of Canada in London.
“The fragmented nature of the European bond market will call into question the euro’s credibility as a reserve currency,” Cole said. “That’s why the problems of the periphery countries are important.”
Canada’s dollar dropped as a government report showed the annual inflation rate unexpectedly slowed in March to 1.4 percent from 1.6 percent in the previous month.
“The number was softer than expected,” said Camilla Sutton, director of currency strategy at Bank of Nova Scotia in Toronto.
The Canadian currency declined 0.5 percent to C$1.0058 per U.S. dollar, from C$1.0004 yesterday. It was at parity with the greenback on April 6 for the first time since July 2008.
To contact the reporters on this story: Ben Levisohn in New York at blevisohn@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net
