The dollar recovered some its steep recent losses versus the resurgent sterling, but experienced choppy trading versus most other major currencies Wednesday in New York, as traders weighed another round of surprisingly positive US economic data.
After suffering massive losses versus the euro and sterling last week, the dollar has been able to steady, even with equities continuing to climb and traders expressing a bit more appetite for riskier, higher yielding currencies.
Continuing a recent string of better than expected housing market reports, the Commerce Department released a report on Wednesday showing that new home sales in the month of February unexpectedly rebounded from a record low.
The report showed that new home sales rose 4.7 percent to an annual rate of 337,000 in February from an upwardly revised January rate of 322,000.
After falling in each of the six previous months, durable goods orders unexpectedly showed a substantial increase in the month of February, according to a report released by the Commerce Department on Wednesday.
The report showed that durable goods orders jumped 3.4 percent in February after falling by a revised 7.3 percent in January. Economists had been expecting durable goods orders to fall by 2.5 percent compared to the 4.5 percent decrease that had been reported for the previous month.
Headlines out of Europe have signaled that the upcoming G-20 Summit in London may be a contentious affair, as world leaders attempt to hammer out a coherent plan to deal with the global economic crisis. Earlier today, Czech PM and EU President Mirek Topolanek called the U.S. recovery plan a way to hell.
Also, striking a defiant tone against the US ahead of the London Summit, China's central banker chief Zhou Xiaochuan on Tuesday repeated his call for a new global reserve currency managed by the International Monetary Fund.
Pointing out the dangers of relying on the one national currency without explicitly mentioning the dollar, Zhou insisted that an international reserve currency disconnected from individual nations would be able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.
In currency moves, the dollar gave back its early gains versus the euro by mid-day, easing back to 1.3612. Earlier in the week, the dollar hit a 10-week low of 1.3735.
The dollar managed to firm up a bit versus the sterling, ending a string of losses. The dollar improved to 1.4520, up from a monthly low of 1.4777, set earlier this week.
The buck was little changed against its Japanese counterpart, holding near 97.50 for most of the day. Against the loonie, the dollar was steady near 1.2300.
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