US Dollar Gains vs. Yen on Housing, Sentiment Data
The U.S. dollar rose against the Japanese yen on Friday, after a trio of better-than-expected data injected a dose of optimism aboutthe U.S. economy.
The upbeat readings on U.S. durable goods orders, new-home sales, and a rebound in consumer sentiment from a 28-year low allayed some of the recent gloom over the economy and financial markets, sending stocks higher and giving a boost to the beleaguered U.S. currency.
"This is perhaps the best we could have ever hoped for amid the current economic conditions," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon in New York.
"It flies in the face of the pessimists out there calling for a recession. It's just simply not reflected in the numbers," he added. "The dollar rally gets a strong green light to continue buying."
In late trading in New York, the dollar rose 0.5 percent to 107.87 yen , after climbing as high as 107.94 yen, slightly below a one-month high of 107.98 yen set on Thursday, according to Reuters data.
The euro traded 0.1 percent higher at $1.5693 , roughly 3.0 cents below a record high set in mid-July. Against the yen, the euro jumped 0.6 percent to 169.34 yen.
But on the New York Board of Trade's U.S. dollar index of major currencies the U.S. dollar remains trapped in its range of the past four months, after seeing a big slide last year.
U.S. durable goods orders were up 0.8 percent in June, after a revised 0.1 percent gain in May, the Commerce Department said Friday.
Separate data showed sales of new homes in the United States fell to a 530,000 annual pace last month, against market expectations for a drop to a 500,000 rate, while consumer sentiment recovered unexpectedly in July after falling in June to the lowest level since the early 1980s.
Oil, Equities in Focus
Gains in U.S. equities and a continued drop in oil prices to a seven-week low on Friday further lifted sentiment toward the dollar. U.S. crude futures last traded down 1.7 percent, at $123.37 a barrel.
"We are really seeing a couple of different factors shape up: oil dropping, equities rally and clearly the good data, which should support at least a minimum dollar rally to yesterday's lows (on euro/dollar)," said Greg Salvaggio, vice president of trading at Tempus Consulting.
More good news on the mortgage sector added to dollar strength. The U.S. Senate voted on Friday to limit debate on a bill aimed at shoring up both the housing market and mortgage finance companies Fannie Mae and Freddie Mac , paving the way for a final vote that is expected on Saturday.
But some analysts cautioned that the impact on the dollar from Friday's positive data may be limited.
"The follow-through will be distinctly limited," said Alan Ruskin, chief international strategist at RBS Global Banking and Markets, in a research note.
"The next real lead on the economy comes from the ISM numbers, and by far the most important data -- nonfarm payrolls -- in a week," he said.
The euro hit a two-week low versus the dollar on Thursday after data showed German business sentiment suffered its biggest drop since September 2001, while euro zone PMIs pointed to contraction in both the services and manufacturing sectors.