Dollar Holds Loss as Traders Watch Economy for Tapering Clues

The dollar maintained a weekly decline against the euro as investors speculated over whether the U.S. economy is strong enough to support a reduction in Federal Reserve stimulus next month.

The Bloomberg U.S. Dollar Index was little changed before a report forecast to show durable goods orders fell for the first time in four months. Fed officials rebuffed international calls at a meeting in Jackson Hole, Wyoming last week to take the threat of fallout in emerging markets into account when tapering U.S. monetary stimulus. The euro was near the highest in a month against the yen before data tomorrow forecast to show continued improvement in Germany’s business climate.

The dollar was little changed at $1.3381 per euro as of 8:45 a.m. in Tokyo from Aug. 23, when it completed a 0.4 percent weekly loss. The U.S. currency bought 98.77 yen from 98.72. The euro was little changed at 132.17 yen, after reaching 132.43 on Aug. 23, the most since July 25.

The Bloomberg Dollar Index traded at 1,026.29 from 1,026.15 last week.

Orders for U.S. durable goods fell 4 percent in July from the previous month, when it increased 3.9 percent, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department releases the data today.

James Bullard, president of the St. Louis Fed, said in an interview with Bloomberg Radio that the domestic economy is the primary objective of policy. “We’re not going to make policy based on emerging-market volatility alone,” he said. An index of emerging-market stocks last week fell 2.7 percent, the steepest in two months.

In Germany, business confidence probably rose for a fourth month in August. The Ifo institute’s business climate index, based on a survey of 7,000 executives, rose to 107 from 106.2 in July, economists predicted ahead of tomorrow’s report.

(Source: Bloomberg)