Forex - Greenback higher on flight to safety

Investing.com - The U.S. dollar traded broadly higher against its major counterparts on Wednesday, on a flight to safety due to weaker than expected U.S. durable goods orders and dovish comments by Federal Reserve Chairman Ben Bernanke.

During U.S. afternoon trade, the dollar was modestly higher against the euro, with EUR/USD slipping 0.07% to hit 1.3304.

Sparking the flight to the safety of the greenback, the Commerce Department reported durable goods orders rose 2.2% in February, partially reversing the previous months revised 3.6% decline, but fell short of expectations for a 3.0% increase.

Core durable goods orders, which exclude transportation, rose by a seasonally adjusted 1.6% in February, compared to expectations for a 1.5% gain.

The data came one day after Federal Reserve Chairman Ben Bernanke said that it was still too early to declare victory in the U.S. economic recovery, fanning speculation that the central bank may embark on a third round of monetary easing to shore up growth.

The euro came under pressure earlier after the head of Germany’s central bank said that a larger euro zone bailout fund would not resolve the debt issues in the region and might even make the crisis worse.

Euro zone finance ministers are to hold talks in Copenhagen on Friday, amid speculation that they will reach an agreement on a larger debt firewall to combat the debt crisis in the region.

The greenback was higher against the pound, with GBP/USD dropping 0.42% to hit 1.5882.

The pound weakened broadly after official data showed that the U.K. economy contracted by 0.3% in the last three months of 2011, more than the preliminary estimate of a 0.2% contraction.

The greenback was lower against the yen, but eased higher against the Swiss franc, with USD/JPY losing 0.53% to hit 82.74 and USD/CHF rising 0.06% to hit 0.9059.

The yen firmed as Japanese companies moved to repatriate overseas earnings before the end of Japan’s fiscal year on March 31.

Elsewhere, the greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD climbing 0.24% to hit 0.9972, AUD/USD dropping 0.84% to hit 1.0370 and NZD/USD down 0.44% to hit 0.8167.

Sentiment on the commodity linked Australian and New Zealand dollars was hit following a sharp drop in Chinese equities markets earlier, amid concerns over a possible slowdown in the world’s second largest economy.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.14% to hit 79.38.