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Forex - Dollar mixed amid uncertainty over U.S. debt talks

Published 07/27/2011, 10:44 AM
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Investing.com – The U.S. dollar was mixed against its major counterparts on Wednesday, as market sentiment was dented by an unexpected fall in U.S durable goods orders, while uncertainty over deadlocked U.S. negotiations to raise the debt ceiling also weighed.

During early U.S. trade, the greenback was up against the euro, with EUR/USD shedding 0.69% to hit 1.4408.

The euro weakened amid fears that the euro zone’s bailout fund may be insufficient to prevent sovereign debt contagion after German Finance Minister Wolfgang Schaeuble said that Berlin was against a “blank check” for the European Financial Stability Facility to purchase bonds on the secondary market.

The greenback was also higher against the pound, with GBP/USD slipping 0.23% to hit 1.6358.

The pound erased early gains after a report showed that U.K. industrial order expectations fell more-than-expected in July.

Safe haven demand boosted the yen and Swiss franc, with USD/JPY dipping 0.03% to hit 77.84 and USD/CHF slipping 0.15% to hit 0.8000.

A report earlier showed that Switzerland’s KOF economic barometer fell to the lowest level since July 2010 in July, adding to fears that the franc’s recent sharp gains may hurt the country’s economic growth.

Meanwhile, the greenback edged higher against its Canadian counterpart but remained lower against its Australian and New Zealand cousins, with USD/CAD inching up 0.10% to hit 0.9453, AUD/USD climbing 0.72% to hit 1.1035 and NZD/USD rising 0.29% to hit 0.8730.

The Australian dollar rallied after stronger-than-expected inflation data bolstered expectations for a rate hike by the Reserve Bank of Australia, while improved business confidence data added to expectations for monetary tightening by New Zealand’s central bank.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.40%.

Earlier Wednesday, the U.S. Commerce Department said durable goods orders dropped 2.1%, led lower by a decline in orders for transportation equipment, after a 1.9% increase in May. Analysts had expected orders to rise by 0.4% in May.

Excluding transportation, orders edged up 0.1% after gaining 0.7% in May.

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