U.S. Markets

Dollar gains on U.S. data, sterling nears seven-year low on Brexit fears

Signs for the dollar, euro and other currencies are seen at a currency exchange shop in Hong Kong November 1, 2014. REUTERS/Damir Sagolj ATTENTION EDITORS: PICTURE 04 OF 23 FOR WIDER IMAGE PACKAGE 'ANOTHER DAY ANOTHER DOLLAR' TO FIND ALL IMAGES SEARCH 'CURRENCY TRADERS'

NEW YORK (Reuters) - The dollar edged higher against most currencies, including the safe-haven yen, on Thursday after strong U.S. manufacturing data pointed to a recovery in the sector, reviving risk appetite across markets.

The strong data came as doubts grew whether the Federal Reserve will be able to raise rates in March, or at all this year. The dollar, as a result, struggled to make significant headway with the euro up 0.1 percent at $1.1024 EUR=.

Orders for U.S. durable goods rose more than expected in January as demand picked up broadly, offering a ray of hope for the struggling manufacturing sector and reducing the risk-off tone that has driven markets in recent sessions.

“The big story is really with dollar-yen, which rebounded with help from positive U.S. data and gains in stocks and oil,” said Vassili Serebriakov, currency strategist at BNP Paribas in New York. “The data helped dollar-yen, but it also eased risk-off sentiment.”

The dollar was last up 0.6 percent at 112.92 yen JPY= and the dollar index .DXY was slightly lower at 97.412.

The yen, which has rallied in recent days pushed by low risk-appetite, weakened on Thursday. “But I wouldn’t sound the all-clear just yet. We see a persistent weakness in Chinese equity markets, and oil markets are still a risk,” said Thu Lan Nguyen, a strategist with Commerzbank in Frankfurt.

Sterling struggled to pull away from a seven-year low against the dollar and was on track for its heaviest weekly fall since 2009 on worries about a possible British exit from the European Union.

“The biggest move for the week is sterling on Brexit worries and it will stay in the spotlight for the first half of the year leading up to the referendum,” said Lee Ferridge, head of macro strategy for North America at State Street in Boston.

U.S. and European stocks were up on Thursday, in line with gains in U.S. crude futures, currently trading up 2.9 percent at $33.06 per barrel CLc1.

Editing by Phil Berlowitz and Andrew Hay