US Dollar Index Surges as Business Investment Plans Appreciate


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The US dollar surged on Tuesday, picking up where it left off last week as investors responded to mixed economic data.

The trade-weighted US dollar index rose 1.4% to 97.32, posting gains across the board. Below is a breakdown of how the US dollar faired against all six of its major competitor currencies.

The EUR/USD fell to fresh lows on Tuesday, tumbling nearly 100 pips to 1.0889.

The GBP/USD declined 100 pips to 1.5369.

The USD/JPY rose to new 2015 highs after trading within a range for the past six months. The pair surged 1.4% to 123.22.

The USD/CHF climbed 0.5% to 0.9504.

The USD/CAD surged to nearly two-month highs, climbing nearly 120 pips to 1.2430.

The USD/SEK advanced 0.7% to 0.8623.

Economic Data

On Tuesday the Department of Commerce said durable goods orders declined 0.5% in April, as expected, but that business investment plans rose for a second straight month.

Orders for non-defense capital goods excluding aircraft, which are used by economists to measure business spending plans, rose 1% in April following an upwardly revised gain of 1.5% in March. The increase suggests the US economy would gradually regain its footing in the second quarter after likely contracting at the start of the year.

Separately, Markit Group said US services PMI weakened more than forecast in May, but that the economy was rebounding from the first quarter lows. The flash services PMI for May weakened to 56.4 from 57.4, despite registering the biggest gain in payroll numbers since June 2014.

Markit chief economist Chris Williamson had positive things to say about the recovery:

“The survey data put the economy on course to rebound in the second quarter, with GDP rising at an annualised rate of around 3%, with non-farm payroll growth continuing to run around the 200,000 level.”

Separately, the Department of Commerce said new home sales rebounded 6.8 percent in April to reach a seasonally adjusted annual rate of 517,000. The figure was well above forecasts.

Finally, consumer confidence also rebounded in May, although the gain was smaller than expected. The Conference Board’s consumer confidence index rose to 95.4 in May from a downwardly revised 94.3 in April.

“Consumer confidence improved modestly in May, after declining sharply in April,” said Conference Board director Lynn Franco in a press release.