The U.S. dollar rallied against the euro and yen on Thursday after solid U.S. economic data, bouncing back from lows plumbed after Wednesday’s Federal Reserve monetary policy statement.
U.S. durable goods orders rose more than expected last month and a fifth straight monthly increase in shipments suggested that business spending on equipment would support economic growth in the second quarter.
The good durable goods orders data was a welcome sign to dollar bulls, as U.S. economic data, including subdued inflation, and uncertainty surrounding U.S. President Donald Trump’s proposed fiscal stimulus have sunk the dollar in recent months.
The euro on Thursday fell 0.5 percent against the dollar, slipping back below the $1.17 mark.
The dollar rose 0.3 percent against the yen to 111.50 yen.
“The most significant thing was the durable goods orders, those came in much better than expected,” said Sireen Harajli, currency strategist at Mizuho Corporate Bank. “Especially given that the recent data releases in the U.S. have been coming in on the weaker side, I think that was welcome news this morning.”
The dollar sank on Wednesday after the Fed’s policy statement remained largely unchanged from June and suggested the Fed was in no hurry to raise interest rates again.
Soft U.S. data on inflation and consumer spending so far this year have pushed the dollar to multi-year lows against the euro, which has also been underpinned by the European Central Bank’s talk of reducing its ultra-loose monetary policy.
The euro has risen more than 11 percent against the dollar so far this year.
“The euro’s seven-month surge … to near the top of its three-year $1.0341-$1.1714 range has called into question our expectations for the pair to range-trade through year-end,” Barclays said in a forecast update.
“(But) we continue to believe that the conditions for a euro breakout are not yet met.”
Analysts also said investigations into the Trump administration’s ties to Russia, and the inability of Trump’s fellow Republicans to push through the president’s promised repeal of the 2010 Affordable Care Act, have reduced the likelihood of tax reform and infrastructure spending plans being enacted soon also.
The Swiss franc was the biggest mover among major currencies, falling to its weakest since the collapse of an official cap in 2015.
The franc has held largely steady for the past two years as a result of capital seeking the security of Switzerland and a campaign of official intervention against the currency.
On Thursday the dollar rose 1.3 percent against the Swiss currency to 0.9618 franc.
(Reporting by Dion Rabouin; Additional reporting by Patrick Graham and Sujata Rao-Coverley in London)