* Orders for U.S. durable goods in November surged but home
* Rise in U.S. Treasury note yields supports dollar
* Thin year-end conditions keeping moves slight
* Quiet trade before Christmas Day holiday when most global
markets are shut
By Julie Haviv
NEW YORK, Dec 24 The dollar rose on Tuesday in
illiquid pre-holiday trade as increasing evidence of a solid
recovery in the United States reinforced convictions the Federal
Reserve will continue to step away from its bond buying
In the very near term, the market will likely struggle to
find fresh stimulus ahead of year-end holidays. Most financial
markets will be shut on Wednesday for the Christmas Day holiday
and many will stay closed on Thursday.
U.S. stocks were little changed ahead of an early close
while European stocks edged up, adding to the best run-in to
Christmas since 1999, although trading in the shortened session
On the U.S. economic front, orders for long-lasting U.S.
manufactured goods surged in November and a gauge of planned
business spending on capital goods recorded its largest increase
in nearly a year, pointing to sustained strength in the economy.
While another report showed new home sales slipped in
November, sales in October were revised to show the highest pace
in more than five years. In addition, house prices rebounded,
underscoring the economy's improving fundamentals.
"While the November reading missed estimates, the revision
to October data puts the new homes market on a very solid
foundation," said Andrew Wilkinson, chief economic strategist at
Miller Tabak & Co. in New York.
"Both median and average prices rose," he said.
The data helped to push U.S. Treasury note yields higher,
buoying the appeal of the dollar.
"The U.S. data was robust enough to keep the dollar
supported to year end, and to convince investors that the
Federal Reserve will continue to taper," said Michael Sneyd, FX
strategist at BNP Paribas.
He was referring to the Federal Reserve's scaling back its
monthly asset purchases in its quantitative easing program.
The durable goods data followed upbeat reports released the
previous day showing consumer spending rose in November at the
fastest pace since June. A survey also showed consumer sentiment
hitting a five-month high heading into the end of the year.
In late morning New York trade, the euro was down 0.2
percent at $1.3664. Against the yen, the common currency
flat at 142.58, but not far from a five-year high of
142.90 set last week.
The dollar gained 0.2 percent to 104.34 yen, not far
off a five-year high of 104.63 touched on Friday.
Although the Fed has gone to a great length to tell markets
that tapering of its bond buying does not automatically lead to
rate hikes, that has not stopped investors from speculating on
the Fed's eventual exit from a zero interest rate policy.
Markets are also now looking to see if the U.S. economy will
be strong enough to allow the Fed to continue withdrawing
support through 2014.
Meanwhile, worries about a cash crunch in China appeared to
have taken a back seat after the central bank last week injected
300 billion yuan ($49.41 billion) into the money market.
Traders, however, will no doubt be keeping a close eye on
any fresh developments there in the year-end lull.