The US dollar rose again on Wednesday, as investors reacted to stronger than expected durable goods orders amid renewed volatility in Asian and European markets.
The dollar index, a weighted average of the dollar against six world currencies, climbed 0.2% to 94.75. It marked the second consecutive advance for the greenback after China’s Black Monday rout crippled the financial markets at the start of the week.
The EUR/USD continued to retreat after hitting 8-month highs on Monday. The pair plunged 130 pips or 1.1% to 1.1377. It faces immediate support at 1.1285, followed by 1.1174. On the upside, initial resistance is likely found at 1.1628, followed by 1.1739.
The dollar steamrolled past the British pound, with the GBP/USD plunging 110 pips or 0.7% to 1.5583. The pair faces immediate support at 1.5500 and resistance at 1.5758.
In economic data, US durable goods orders rose more than expected in July, signaling renewed momentum in the US manufacturing sector.
Excluding transportation equipment, durable goods orders rose 0.6%, official data showed.
A stronger dollar continued to pressure gold, which declined by more than $8 to $1,130.00 per troy ounce on the New York Mercantile Exchange. Oil futures were up, with West Texas Intermediate gaining 39 cents to $39.70 a barrel. Brent, the global benchmark, added 33 cents to $43.54 a barrel on London’s ICE Futures exchange.
Wall Street index futures opened sharply higher on Wednesday as investors reacted to the economic data. All of the benchmark gauges ended in the red on Tuesday, as investors remained skeptical about China’s new round of stimulus following the Black Monday selloff.
The People’s Bank of China announced on Wednesday it had pumped 140 billion yuan into the interbank market in order to stave off another run on equities. The results so far have been mixed.
China’s benchmark Shanghai Composite Index closed down 1.3% at 2,927.29 on Wednesday, its sixth consecutive drop. The benchmark gauge has plunged a resounding 22.8% over the six-day period.
Elsewhere in Asia, the Nikkei 225 in Tokyo rebounded 3.2% to 18,376.83. Hong Kong’s Hang Seng Index closed down 1.5% at 21,080.39.
European markets tread water on the day, with the FTSE 100 and DAX each gaining 0.1%. The Eurozone’s benchmark Euro Stoxx 50 ended down 0.1%.