The dollar pushed higher against the other major currencies on Wednesday, as the release of strong U.S. data on durable goods orders added to optimism over the strength of the economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.06% at 94.89.
The dollar was higher against the yen, with USD/JPY up 0.77% to 119.77.
The U.S. Commerce Department reported on Wednesday that total durable goods orders increased by 2.0% last month, compared to expectations for a decline of 0.4%. Orders for durable goods in June were revised to a gain of 4.1% from a previously reported increase of 3.4%.
Core durable goods orders, which exclude volatile transportation items, inched up 0.6%, topping forecasts for an increase of 0.4%. Core durable goods orders rose 1.0% in June, whose figure was revised from a previously reported gain of 0.6%
The greenback was also boosted after the People’s Bank of China cut interest rates by 25 basis points to 4.6% on Tuesday, in a bid to bolster economic growth after a plunge in the country’s stock market.
The dollar also extended gains against the euro, with EUR/USD tumbling 1.34% to 1.1364.
The single currency has been boosted in recent sessions as investors fled to the relatively safe-haven currencies amid intense volatility in markets.
Demand for the euro was also underpinned by investors borrowing the low-yielding currency to fund investment in risk assets.
But concerns over whether a free fall in China’s stocks will make the world’s second-largest economy weaker persisted. Shares in Shanghai opened higher on Wednesday, before ending down 1.3% in a volatile session.
Recent steep declines in Chinese equity markets have sparked fears that they will hasten an economic downturn and undermined investor confidence in the government’s ability to revitalize economic growth.
The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears over the condition of the economy.
The dollar was higher against the pound and the Swiss franc, with GBP/USD down 0.66% at 1.5584 and with USD/CHF advancing 0.84% to 0.9475.
The Australian dollar was steady, with AUD/USD at 0.7134, and NZD/USD edged up 0.12% to 0.6482.
The Antipodean currencies are sensitive to news out of China, a top export market for Australia and New Zealand.
Meanwhile, USD/CAD was down 0.49% to 1.3271, extending its pullback from Tuesday’s 11-year high of 1.3298.