The dollar weakened against its peers today following the release of data which revealed a sudden drop in US durable goods orders for February generating doubt surrounding the state of economic recovery. Durable goods orders dropped by 1.4% in February compounding forecasts for an increase of 0.4%. Core durable goods orders which do not include transportation slipped 0.4% in February while experts predicted an increase of 0.3%. Inflation data released yesterday revealed that the Fed still has room for stricter policy even though inflation is below target.
The euro strengthened against the dollar following the release of data which revealed that German business confidence was better in March generating positive views on the state of the largest economy within the euro zone. The Ifo institute’s business climate index increased from a reading of 106.8 in February to 107.9 in March while experts forecast the index at 107.3. Discouraging data out of the US helped boost the euro to a 2 week high above its 1.10 handle.
The pound strengthened against the dollar after the British Banker’s Association released data which revealed that the number of new UK mortgages approved in February rose to its highest level in 5 months to 37,300 up from 36,400 in January. The figures beat forecasts of an increase to 36,900.
The yen strengthened against the dollar with the pair declining roughly 0.4% trading around its 119 handle. US durable goods data pushed the pair to the low of the day. The pair still remains range bound as the market is not applying pressure to the downside nor the upside.
The Australian, New Zealand and Canadian dollars strengthened considerably against the dollar on the US data. The Aussie dollar had regained lost ground after weakening on the release of the Reserve Bank of Australia’s review on financial stability which highlighted lower mortgage rates. The kiwi dollar had regained lost ground after weakening on data which revealed that New Zealand’s trade surplus increased much less than forecast in February.
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