Dollar hits two-week high on upbeat US data, euro slips

NEW YORK: The dollar climbed to a two-week high against a basket of currencies on Tuesday as stronger-than-forecast data on US services industries and new home sales allayed some worries about the state of the world's largest economy.

The euro weakened to a two-week lows versus the greenback on expectations the European Central Bank meeting on Thursday would hint at a delay in raising rates until next year and soon relaunch long-term bank loans to battle an economic slowdown.

Among other G10 currencies, the Canadian dollar fell to its lowest in over five weeks due to a combination of trade troubles, resignations from Prime Minister Justin Trudeau's cabinet and expectations the Bank of Canada could be on the cusp of changing its policy direction.

"The dollar has been supported by the data," said Brendan McKenna, currency strategist at Wells Fargo Securities in New York.

Earlier on Tuesday, the US Commerce Department said new single-family home sales increased to a seven-month peak in December, while the Institute for Supply Management said its gauge on services sector activity rose more than expected last month.

An index that tracks the dollar against the euro, yen, sterling and three other major currencies edged 0.22 percent higher to 96.895 at 11:48 a.m. EST (1648 GMT). It earlier touched a two-week high of 97.008.

The euro fell to a two-week trough of $1.1292. It was last down 0.35 percent to $1.13.

"The ECB's new projections on Thursday might paint a more subdued picture than before," said Commerzbank FX analyst Antje Praefcke, adding the euro appeared to be "aiming for the $1.13 mark."

Investors are seeking out higher-yielding currencies as price volatility in the world's most-traded currencies has plummeted following a dovish shift by major central banks.

The Bank of Canada is expected to leave domestic borrowing costs unchanged at its policy meeting on Wednesday. Some traders expect it might lower rates later this year.

The Canadian currency was 0.32 percent weaker at C$1.3347. It hit C$1.336 earlier on Tuesday, which was its lowest against the greenback since Jan. 25.

Meanwhile, the Australian dollar rose briefly after the Reserve bank of Australia left key rates unchanged earlier Tuesday and policy-makers clung to an optimistic outlook on the economy.

The Aussie dollar retreated in US trading from its earlier session peaks, down 0.25 percent on the day at $0.7074.