Investing.com - The dollar extended gains against the other major currencies on Wednesday after data showing that orders for long-lasting U.S. factory goods rebounded in August and as investors awaited details of the Trump administration’s new tax plan.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.52% at 93.37 by 09.12 AM ET (13:13 GMT), the highest since August 23.
Durable goods orders rose 1.7% in August from the prior month, the Commerce Department reported, easily outstripping economists forecast for a 1.0% rise.
The upbeat data pointed to an increase in business investment and offset concerns over the possible impact of Hurricanes Harvey and Irma on growth.
Demand for the dollar was also underpinned after Federal Reserve Chair Janet Yellen said Tuesday that the Fed needs to continue with gradual rate hikes in spite of uncertainty over the inflation outlook.
Higher rates tend to boost the dollar by making the U.S. currency more attractive to yield-seeking investors.
The dollar was also boosted by the broadly weaker euro, which remained on the defensive in the wake of Sunday’s German election results.
EUR/USD was down 0.59% at a five-week low of 1.1722.
Chancellor Angela Merkel won the elections but saw large numbers of voters desert her party for the far right.
Merkel now faces months of coalition talks to try to form a stable government, leaving investors’ worries that political uncertainty could hit the Germany economy and make closer euro zone integration more difficult.
The euro pushed higher against the softer yen, with EUR/JPY rising 0.24% to 132.70.
The dollar rose to the highest level since mid-July against the Japanese currency, advancing 0.83% to 113.17, rebounding from Tuesday’s low of 111.49.
Elsewhere, sterling was lower against the stronger dollar, with GBP/USD down 0.5% at 1.3391.
Investors were looking ahead to the announcement of a tax plan by the Trump administration later in the day, along with a report on U.S. pending home sales.