USD Showing Mixed Signals

By: Hillel Fuld
The USD rallied vs the EUR but declined against the JPY on Wednesday as U.S. durable goods orders were weaker than was expected and added to fears about financial recovery in the world's greatest economy.

Also driving risk aversion was a Federal Reserve report stating that overall U.S. economic news was not improving robustly and a few areas of the United States had lost steam over the past few weeks.

The Fed's Beige Book summary of national economic conditions, based on information before July 19, pointed to a pesimistic recovery with sluggish housing markets and declining sales of costly items like new cars.

"Volume is really light and today people put a lot on durable goods," said Phil Streible, senior market strategist at Lind-Waldcock in Chicago.

He said EUR sellers were stepping in at the $1.3000 point on the euro/dollar and there was little buying interest until the $1.2750 level.

"It takes a lot of buying to hold things up but only little buying to see it fall," Streible said.

In late afternoon trading in New York, the euro  traded at $1.2979, down 0.1 percent, with the session peak at $1.3041 and the session low at $1.2968. Investors are still looking for news that could push the single currency out of a recent range topping $1.30 for the fifth time this month on Wednesday.

The dollar was 0.5 percent lower at 87.44 yen  It touched a session low at 87.27.

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