Dollar Little Changed as U.S. Durable Goods Unexpectedly Gain

By Oliver Biggadike

March 25 (Bloomberg) -- The dollar was little changed against the euro as a government report showed an unexpected increase in orders for durable goods last month.

South Korea’s won was the biggest gainer versus the dollar after a finance ministry official said yesterday the government aims to spend 17.7 trillion won ($13.3 billion) by May or June to help the economy recover. The Australian dollar and Swedish krona advanced versus the greenback on speculation demand for higher-yielding assets will increase.

“You’ll see stocks continue to go higher and the risk- loving currencies like the Aussie and euro versus the dollar go higher as well,” said Andrew Chaveriat, currency strategist at BNP Paribas Securities SA in New York.

The dollar traded at $1.3478 per euro at 9:45 a.m. in New York, compared with $1.3468 yesterday. The 16-nation currency increased 0.1 percent to 131.98 yen from 131.81. The dollar traded at 97.96 yen, compared with 97.86.

Orders for durable goods increased 3.4 percent in February, the biggest gain in more than a year, the Commerce Department reported today. The median forecast of 69 economists surveyed by Bloomberg was for a decrease of 2.5 percent.

The 16-nation euro gained earlier versus the dollar as a report showed German business confidence this month was in line with the expectations of economists.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, was 82.1 in March, compared with 82.6 in the previous month. The median forecast of 37 economists surveyed by Bloomberg was for a drop to 82.2. The reading was the worst since November 1982.

Euro Outlook 

“Sentiment data is pretty dire around the world at the moment, and the German Ifo is a prime example of that,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. in London. “However, it more or less matched expectations, and as long as things don’t get worse the euro will benefit.”
The won climbed as much as 2.1 percent to 1,362 per dollar, the strongest level since Jan. 29. South Korea’s economic stimulus plan includes funds for cash handouts, cheap loans, infrastructure and job training, the government said yesterday.

“There’s some positive sentiment that has led to a softening of the U.S. dollar” against the won, said Thio Chin Loo, a senior currency analyst at BNP Paribas SA in Singapore.

The won is the biggest loser against the dollar this quarter, dropping 7.6 percent on speculation South Korea’s economic slump will deepen.

A report on U.S. new-home sales due from the Commerce Department at 10 a.m. Washington time is forecast to show projected purchases fell last month to a 300,000 annual rate, the fewest since records began in 1963, from 309,000 in January.

Business confidence in Belgium unexpectedly increased this month, the National Bank of Belgium said yesterday. The index rose to minus 28.6 from minus 31.6 in February.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
Last Updated: March 25, 2009 09:46 EDT