LONDON, Nov 28: The dollar firmed against the euro on Wednesday despite a decline in orders for US durable goods and renewed prospects for another cut in US interest rates. The single European currency in late-day trade was at $1.4749 after 1.4825 late Tuesday in New York. The dollar was meanwhile trading at 110.33 yen, up from 109.01 on Tuesday.
“The dollar is a bit stronger as everyone thinks it has been oversold,” said Mic Mills, a trader at TradIndex.com.
The gains were mainly against the euro after the single currency surged to a new record high of close to $1.50 last week.
Mills said currency markets would remain dominated by technical trades and corrections for the time being. A sluggish economy and suggestions that further cuts in US interest rates were likely should in principle make the dollar less attractive to investors.
Mills added that the broader and weaker trend in the dollar was still intact given the gloomy outlook for the US economy and prospects for further interest rate reductions.
US data on Wednesday showed that durable goods orders fell by 0.4 per cent in October from September against forecasts for a 0.3 per cent rise and marking the third consecutive monthly slide.
“This evidence reinforces the likelihood that the economy will slow dramatically in the fourth quarter ... It also reinforces the argument that the Fed needs to keep cutting interest rates,” said Jim Dorsey at Global Insight.
In other developments, the industry figures revealed that sales of existing homes in the United States fell for the eighth consecutive month in October and prices posted a record plunge.—AFP
