* Orders for U.S. durable goods in November surged but home
* Rise in U.S. Treasury note yields supports dollar
* Thin year-end conditions keep moves slight
* Quiet trade before Christmas holiday when most global
markets are shut
By Julie Haviv and Gertrude Chavez-Dreyfuss
NEW YORK, Dec 24 The dollar edged higher on
Tuesday in thin pre-holiday trade, after two days of losses, as
increasing evidence of a solid U.S. economic recovery affirmed
expectations the Federal Reserve will continue to scale back its
In the near term, the market will likely struggle to find
fresh motivation ahead of year-end holidays. Most financial
markets will be shut on Wednesday for Christmas Day and many
will stay closed on Thursday.
On Wall Street, U.S. stock indexes ended at record highs in
an early close while European stocks edged up, adding to the
best run-in to Christmas since 1999, although trading in the
shortened session was thin.
U.S. Treasury yields, meanwhile, edged higher with benchmark
10-year notes trading just shy of 3.00 percent, reflecting an
economy that could be finally clicking on all cylinders and
boosting the dollar.
Data showed 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.
"The signals of a rebounding economy continue with each new
release of data," said Sean Cotton, vice president and foreign
exchange advisor at Bank of the West in San Ramon, California.
The U.S. 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
In afternoon trading, the euro was down 0.2 percent at
$1.3673. Against the yen, the common currency flat at
142.58 yen, but not far from a five-year high of
142.90 yen set last week.
The dollar gained 0.2 percent to 104.30 yen, just
below a five-year high of 104.63 touched on Friday, while the
dollar index was up 0.1 percent at 80.523.
Although the Fed has gone to great lengths 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 at year-end.