Dollar bounces back after hitting long-term lows, bolstered by US data

NEW YORK: The US dollar rallied on Thursday after solid US economic data, bouncing back from months- and years-long lows plumbed in early trading that followed Wednesday's Federal Reserve policy statement.

Data released on Thursday showed US 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 solid durable goods orders data was a welcome sign to dollar bulls, as US economic data and uncertainty surrounding US President Donald Trump's proposed fiscal stimulus have hit the dollar in recent months.

The euro on Thursday fell 0.4 percent against the dollar, slipping below the $1.17 mark. It had earlier risen to $1.1776, its highest since January 2015.

The British pound fell 0.35 percent against the dollar to $1.3075, having earlier reached its highest level since September 2016.

The dollar made its largest move among major currencies against the Swiss franc, rising 1.4 percent to 0.9640 franc.

The Canadian dollar was near a two-year high against the greenback before slipping on the US data. The greenback was last up 0.85 percent to C$1.2548.

"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 US 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 US data on inflation and consumer spending 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.

Analysts also said investigations of 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.