NEW YORK (AFP) - The dollar traded mainly higher Tuesday as better-than-expected data on US durable goods orders raised prospects the Federal Reserve will avoid an aggressive interest rate cut this week.
The single European currency was at 1.4774 dollars around 2200 GMT, down from 1.4782 late Monday in New York.
The dollar was at 107.07 yen, up from 106.87.
The currency market remained fixated on a Fed decision Wednesday that many analysts have predicted could mean a reduction of as much as half a point in the benchmark federal funds rate in the face of slowing US economic growth.
"No one believes that the outcome of the Federal Reserve meeting will be dollar bullish," said Kathy Lien, chief strategist at Forex Capital Markets.
"Don't expect the next rate cut to be the Fed's last. At minimum, US interest rates will come down to 2.50 percent before this easing cycle is over," she said.
The Federal Open Market Committee (FOMC) made an emergency rate cut a week ago to ward off recessionary risks, slashing the fed rate by a record three-quarters of a percentage point, to 3.5 percent.
US data published Tuesday muddied the outlook for the scale of a likely rate cut.
US orders for durable goods in December rose 5.2 percent from November, their sharpest gain since July 2007.
The performance was well above market expectations of a rise of 1.6 percent, placing a question mark over suggestions that the United States could slip into recession.
"Today's durable goods report is a solid poke in the eye for the (economic) hard-landing camp," said Michael Woolfolk at the Bank of New York Mellon.
"This is the first of what is likely to be a set of data this week indicating that although the US economy is decelerating, it is still well from recessionary conditions," he said.
US consumer confidence data, meanwhile, showed a decline in January compared with December but the slide was less pronounced than the market had anticipated.
The Conference Board's confidence measure fell to 87.9 in January from 90.6 in December, beating forecasts of a decline to 87 points.
"Not surprisingly, consumer confidence is fading rapidly, but a similar decline in spending might not occur if the labor market holds up," said Joel Naroff of Naroff Economic Advisors.
"But the decline was not due to any deterioration in the current economy. Rather it was all due to fears of the future," he said.
In late New York trading, the dollar was at 1.0935 Swiss francs, up from 1.0890 late Monday.
The pound was at 1.9892 dollars, up from 1.9842.
No comments:
Post a Comment