Dollar rises against yen, euro ahead of durable goods data

Investing.com - The dollar advanced against most of the other major currencies in holiday-thinned trade on Tuesday, as investors looked ahead to U.S. data on durable goods orders and new home sales later in the day to gauge if the U.S. economy will be strong enough to allow the Federal Reserve to continue withdrawing support through 2014.

The Commerce Department said Monday that U.S. personal spending rose 0.5% last month, in line with expectations and the highest since June.

The greenback strengthened broadly last week after the Fed announced that it would reduce its USD85 billion-a-month bond buying program by USD10 billion in January.

During European afternoon trade, EUR/USD dipped 0.16% to 1.3675. Official data released earlier showed that consumer spending in France rose 1.4% in November, the first increase in four months and easily surpassing expectations for a 0.4% gain.

Separate data confirmed that France’s economy grew 0.1% in the third quarter, while the second quarter figure was revised up to a 0.6% gain from a previous estimate of 0.5%.

The dollar was also higher against the yen, with USD/JPY up 0.22% to 104.33. The Japanese government released a monthly economic report earlier in the day, omitting the word “deflation” in its description of the economy for the first time in four years, saying instead that “prices hold firm.”

Elsewhere, the greenback was modestly higher against the pound and Swiss franc, with GBP/USD down 0.08% to 1.6345 and USD/CHF easing up 0.17% to 0.8953.

Mortgage approvals in the U.K. rose more-than-expected in November to hit the highest level since December 2009, according to the British Banker's Association.

The greenback also posted small gains against the commodity-linked currencies. The Australian, New Zealand and Canadian dollars were all lower, with AUD/USD shedding 0.15% to 0.8921, NZD/USD dipping 0.23% to 0.8180 and USD/CAD up 0.08% to 1.0619.

The People’s Bank of China injected USD4.7 billion through open-market operations for the first time in three weeks on Tuesday, sending borrowing costs to around 5.5%, well off the previous day’s high of nearly 9%.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.17% to 80.72.

Trading volumes are expected to remain light due to the Christmas holiday and as many traders already closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.