Dollar weakens as US data disappoints

[NEW YORK] The dollar extended its losses on Friday on a run of weaker-than-expected US economic data, helping prop up the euro despite lack of progress in Greece bailout talks.

The government report on US durable goods orders was the latest to raise questions about the Federal Reserve's planned interest rate increase. While the headline number rose 4.0 per cent in March, that was driven by jumps in civilian and military aircraft and autos; without them orders fell 0.2 per cent.

"The weak details in durable goods and the manufacturing surveys for April are likely attributable to the appreciating dollar, which is biting harder into the economy," said Ryan Sweet of Moody's Analytics.

The Federal Reserve's policy arm, the Federal Open Market Committee, meets Tuesday and Wednesday. The FOMC has said any increase in near-zero interest rates, which some expect as early as June, would be data-dependent.

"Another round of softer data has investors worried that the central bank will grow more dovish. Not only have we seen the dollar extend its losses against all major currencies but Treasury yields have also moved lower," said Kathy Lien of BK Asset Management.

"We can see that broad-based weakness in the US dollar played a major role in the EUR/USD's recovery," she said in a research note.

Meanwhile, the Greek drama dragged on. Eurozone finance ministers ended a heated meeting Friday in the Latvian capital Riga without a breakthrough toward unlocking 7.2 billion euros (S$10.4 billion) in bailout cash for Greece to help it avert a looming default.

Eurozone ministers were angered by Greece's lack of progress in coming up with reforms required for the payment. "There remain big, big problems to be solved for Greece," Eurogroup chairman Jeroen Dijsselbloem said after the talks.

"It has been a volatile week for global equity and commodity markets as the softer USD provided some support. But fairly disappointing US economic data and ongoing concerns regarding Greece's economic stability continue to dominate the markets, bringing high volatility and nervous trading conditions," said Sucden analyst Myrto Sokou in a client note.

AFP