Dollar up on US data

The dollar rose against the yen on Thursday, clawing back towards a two-week high hit the previous day after better-than-expected durable goods orders eased concerns about the outlook for the US economy.
The dollar also gained versus the euro after data on Wednesday showed that durable goods orders fell by less than expected in April, while orders excluding transport equipment rose 2.5 percent for their biggest gain since July.
The data underscored market expectations for the Federal Reserve to keep interest rates on hold for now and to raise them by 0.25 percentage point to 2.25 percent by the year-end. That gave US bond yields a boost as well as the dollar.
The US currency drew some support after Dallas Fed President Richard Fisher said late Wednesday that the US central bank would likely increase interest rates "sooner rather than later" if inflation worsens, even if the economy remains weak.
Such economic data by itself, however, is unlikely to enable the dollar to break above its recent range against the yen, traders said, adding that the dollar could come under pressure if oil prices rise. "Oil prices are still the factor that can whip the market around," said Akira Kato, a senior manager for Bank of Tokyo-Mitsubishi UFJ's foreign exchange trading department.
"As long as oil prices stay high, dollar selling pressure will remain strong," he said. The dollar rose 0.2 percent to 104.94 yen edging back towards a two-week high of 105.32 yen hit on electronic trading platform EBS on Wednesday. Traders said the dollar was unlikely to immediately rise 105.70 yen, which would be a three-month high.
Dollar selling interest was likely to be strong at levels above 105 yen including possible offers from Japanese exporters, they said. The euro fell 0.2 percent to $1.5611. Moves in oil prices are seen as key for the dollar, as surging oil prices have fanned fears about the ability of US consumers and businesses to weather the credit and housing market-led downturn.
The dollar has gained some reprieve this week as oil prices have retreated from a record high of $135.09 a barrel hit last week. US crude oil futures edged down to below $131 on Thursday.
The dollar has tended to fall when oil prices surge due to speculation that oil-producing countries may use the increased dollar-denominated windfall from crude exports to buy euros and other currencies to diversify their portfolios. Morgan Stanley said in a research note that at current prices, oil export receipts enjoyed by all oil net exporters total around $200 billion a month.
The yen fell broadly as Japan's benchmark Nikkei share average soared more than 3 percent, pointing to an increase in investors' risk appetite and a rise in demand for carry trades. Share prices are considered a barometer of risk appetite, and a rise in equities can boost demand for carry trades, in which low-yielding currencies like the yen are sold to invest in higher-yielding currencies and assets.