NEW YORK (AFP) — The dollar advanced a few notches against the euro Wednesday as a better-than-expected survey on US durable goods orders offset a report showing German inflation had crept higher, dealers said.
The eurozone currency had strengthened earlier in the day after a spike in German inflation figures suggested that the European Central Bank (ECB) would keep its interest rates at least on hold for some time to combat rising prices.
That worked in favor of the euro until the survey on US durable goods orders showed a much smaller-than-expected drop of 0.5 percent in April.
Economists said the report showed that the US economy is proving more resilient, amid a housing and credit crunch, than some doubters believe.
The single European currency was swapping hands at 1.5641 dollars around 2100 GMT, down slightly from 1.5686 dollars late Tuesday.
The dollar rose against the Japanese yen, rising to 104.71 yen, from 104.24 a day earlier.
"The US dollar has advanced across the board but there is no evidence that the greenback is at the forefront of a larger bullish move," said Jamie Saettele, a currency strategist at Forex Capital Markets.
Analysts pointed out that most of the decline in US durable goods orders was in the transport sector. Excluding that segment, orders were up 2.5 percent.
"This was a decent report and seems to indicate that the economy has far from collapsed," said Joel Naroff of Naroff Economic Advisors.
Meanwhile, official figures showed German inflation accelerated sharply in May, adding to worries about Europe's largest economy and further dashing hopes of a cut in eurozone interest rates.
According to an official projection based on data from six of Germany's 16 states, consumer prices rose 3.0 percent year-on-year, up from 2.4 percent in April and well above the ECB's target of just below 2.0 percent.
The main culprits were rising energy and food prices.
"The latest CPI data ... highlights that the risk ... remains skewed to the topside," said Matthew Foster-Smith at IFR Markets.
For the eurozone as a whole, analysts expect May inflation to accelerate again to an annual 3.6 percent from 3.3 percent last month, partly as a result of higher energy prices. That would match the March figure, which was the highest since the euro was created.
"This is all pointing towards the ECB having to continue with its hawkish stance to keep inflationary pressures in check, and although this may be bad news for consumers, the accompanying strong yields on euro deposits should leave the currency looking upbeat," said James Hughes, AN analyst at CMC Markets.
The ECB has left its key short-term interest rate unchanged at 4.0 percent since June 2007 to focus on keeping prices under control.
In late New York trading, the dollar stood at 1.0377 Swiss francs, up from 1.0337 on Tuesday.
The pound was priced at 1.9807 dollars, up from 1.9763.
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