Dollar gains on strong durable goods report

AP News
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Posted: Aug 24, 2011 4:02 PM
Dollar gains on strong durable goods report

The dollar gained against other major currencies Wednesday after a federal durable goods report was more positive than expected.

The U.S. Commerce Department said orders for durable goods rose 4 percent in July, much better than the 2.4 percent increase economists had expected. The rise in orders was due to higher demand for autos and aircraft.

The euro slipped to $1.4421 In late trading Wednesday from $1.4423 late Tuesday. The British pound fell to $1.6374 from $1.6499.

Investors are holding off on big moves in anticipation of a speech Friday from Federal Reserve Chairman Ben Bernanke concerning the economy.

Thomas Molloy, head of trading at FX Solutions, said, however, that investors are beginning to think Bernanke will not announce another round of bond acquisitions and that helped push the dollar higher.

While bond buying might boost economic activity, the potential for lower rates can tarnish a currency's appeal when the market is hungry for bigger returns.

In other trading Wednesday, the dollar rose to 0.7947 Swiss franc from 0.7912 Swiss franc late Tuesday and fell to 98.83 Canadian cents from 98.92 Canadian cents.

The dollar rose to 77.01 Japanese yen from 76.66 Japanese yen late Tuesday. Overnight, Moody's ratings agency downgraded Japan's credit rating, citing large deficits and government debt. Analysts had expected the move from Moody's Investors Service because other agencies already had downgraded Japan's debt.