Dollar edges higher vs. euro, slips vs. yen

The dollar edged higher against the euro on Wednesday, but slipped against the yen after official data showed that U.S. orders for long lasting manufactured goods fell unexpectedly in March.

During U.S. morning trade, the dollar inched up against the euro, withEUR/USD dipping 0.09% to 1.2990.

The euro recovered from two-week lows against the dollar earlier in the session as European equities climbed and peripheral euro zone bond yields fell amid growing expectations that the European Central Bank will cut interest rates, while hopes that Italy will soon have a government also lent support.

Enrico Letta, deputy leader of the Democratic Party was named as Italy’s prime minister by President Giorgio Napolitano on Wednesday and pledged to form a coalition government to end two months of political deadlock.

But sentiment on the single currency remained fragile after a report showed that the Ifo index of German business climate fell to a four month low of 104.4 in April from 106.7 in March.

Analysts had expected the index to tick down to 106.2.

The data came one day after a report showed that Germany’s manufacturing and service sectors contracted in April.

Recent comments by ECB officials have indicated that the bank would consider cutting rates if economic data continued to deteriorate.

The dollar edged lower against the yen, with USD/JPY dipping 0.09% to 99.37, off session highs of 99.77.

The dollar erased gains against the yen after official data showed that U.S. durable goods orders dropped 5.7% in March, much worse than expectations for a decline of 2.8%. 

Core durable goods orders, which exclude transportation items, fell 1.4%, compared to expectations for a 0.5% increase. 

The dollar remained lower against the pound, with GBP/USD rising 0.21% to trade at 1.5270. 

Investors remained wary ahead of preliminary data on U.K. first quarter gross domestic product on Thursday, amid cautious optimism that the economy would narrowly avoid a triple-dip recession.

The dollar was higher against the Swiss franc, with USD/CHF climbing 0.39% to 0.9485.

The greenback was mixed against its Australian, New Zealand and Canadian counterparts, with AUD/USD edging down 0.03% to 1.0258,NZD/USD advancing 0.55% to 0.8443 and USD/CAD inching up 0.09% to 1.0267.

The New Zealand dollar was boosted after the Reserve Bank of New Zealand left rates unchanged at 2.5% earlier and said they were likely to remain on hold for the rest of this year.

Meanwhile, the Australian dollar remained under pressure after weaker-than-forecast first quarter inflation data sparked renewed speculation over further rate cuts in the coming months.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.03% to 83.13.

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