Dollar Surges to a Seven-Week High on Strong US Durable Goods Data

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Dollar Surges to a Seven-Week High on Strong US Durable Goods DataThe dollar touched its highest level in seven weeks after data indicated that U.S. durable goods orders rose unexpectedly in April.

The Bloomberg Dollar Spot Index, which monitors the dollar against 10 main currencies, rose 0.2 percent to 1,012.77 in mid-day trading in New York. The gauge rose to 1,012.85, its strongest level since April 8.

The euro plunged 0.2 percent to $1.3616 and hit $1.3613, its weakest since February 13. The shared currency has declined 1.8 percent in May, the most since January. The euro fell 0.1 percent to 139.02 yen, while the greenback rose 0.2 percent to trade at 102.10 yen.

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“The data has a soft impact on euro-dollar, the surprise here is positive,” Athanasios Vamvakidis, a London-based head of Group of 10 currency strategy at Bank of America Corp, told Bloomberg. “We need an even stronger, more widespread, positive data surprises. We need six months of consistently strong data.”

The euro was hit hard by European Central Bank President Mario Draghi’s comments on Monday that the central bank is ready to boost stimulus.

“What we need to be particularly watchful for at the moment is, in my view, the potential for a negative spiral to take hold between low inflation, falling inflation expectations and credit, in particular in stressed countries,” said Draghi.

Hungary’s forint declined further after the central bank reduced interest rates for the 22nd straight month after inflation took turn for negative in April. The National Bank of Hungary slashed the two-week deposit rate to 2.4 percent, causing the forint to plunge 0.2 percent to 303.33 per euro. It also fell 0.4 percent to trade at 222.81 against the dollar. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com