The dollar reached a two-week high against the yen as a measure of U.S.
durable goods orders unexpectedly increased, signaling the outlook for
the world's biggest economy may improve. The Commerce Department
provided traders with some economic data.
Durable goods orders fell 0.5% during April, which is a less severe
downturn than expected. Excluding transportation, durable goods orders
increased 2.5%. Economists forecast a 0.5% downturn following 1.7%
increase registered in the previous month.
Japan's currency touched a one-month low against the euro and the
weakest since November versus the Australian dollar, dropping to the
day's lowest levels as an earlier decline in crude oil spurred
investors to buy higher-yielding assets funded in Japan's currency, a
strategy known as the carry trade. The yen pared its drop as oil
reversed its decline.
Futures on the Chicago Board of Trade showed a 30 percent chance the
Federal Reserve will raise its target rate by a quarter-percentage
point to 2.25 percent on Sept. 16, up from 21 percent a week ago.
``A pull-back in oil prices has calmed some nerves,'' said Stephen
Malyon, co-head of currency strategy at Scotia Capital Inc. in Toronto.
The euro pared its drop after a report showed inflation in Germany,
Europe's largest economy, accelerated more than forecast in May.
German consumer prices rose 3 percent this month from a year ago after
rising 2.6 percent last month, when measured using a harmonized
European Union method, the Federal Statistics Office said. The median
forecast was for inflation to quicken to 2.9 percent. A separate report
showed French consumer confidence dropped to a record low in May.
The euro will trade at $1.56 at the end of next month, and fall to
$1.49 at year-end, according to the median forecast in a Bloomberg
survey of 44 analysts.
The dollar also rose against the yen as the Treasury prepared to sell
$30 billion of two-year notes today and $19 billion of five-year debt
tomorrow. The U.S. currency appreciated 0.3 percent against the yen
when the government sold $30 billion of two-year securities on April
23.