Dollar higher vs. euro after dismal U.S. durables data

The dollar regained ground against the euro on Wednesday after official data showed that U.S. orders for long lasting manufactured goods fell unexpectedly in March, reinforcing concerns over the global economic outlook.

During European afternoon trade, EUR/USD hit an intra-day low of 1.2992, down from session highs of 1.3034.

The Commerce Department said durable goods orders dropped 5.7% last month, worse than expectations for a decline of 2.8%. 

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

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

Earlier Wednesday, 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 trimmed gains against the yen, with USD/JPY inching up 0.05% to 99.49, off session highs of 99.77.

The dollar remained lower against the pound, with GBP/USD rising 0.17% to trade at 1.5264. 

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 steady close to two-week highs against the Swiss franc, with USD/CHF easing up 0.11% to 0.9459.

The greenback was broadly lower against its Australian, New Zealand and Canadian counterparts, with AUD/USD rising 0.14% to 1.0276,NZD/USD advancing 0.68% to 0.8457 and USD/CAD inching up 0.03% to 1.0261.

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 0.01% to 83.14. 

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