* US durable goods orders fall to six-year low in January
* US jobless claims up, continued claims at record
* U.S. forecasts $1.75 trillion budget deficit
* Sterling rises as bank insurance scheme launched
(Recasts, updates prices, adds comment)
By Nick Olivari
NEW YORK, Feb 26 (Reuters) - The dollar fell against the
euro on Thursday with investors prepared to take on more risk,
though poor U.S. data capped losses with some investors
preferring the safer haven of the U.S. currency.
Though the data was evidence of how poorly the U.S. economy
is faring, investors believe with a proactive administration,
the United States is more likely to recover than other parts of
the world.
"Even with bad data, the U.S. dollar is still a safe-haven
play. If the U.S. were alone in the crisis, the euro would be
trading two-to-one to the dollar," said Dan Cook, senior market
analyst, IG Markets, Chicago. "But this is a global crisis."
Among other majors, the British pound was boosted after the
launch of a bank insurance scheme for toxic assets. The dollar
touched a three-month high against the yen on continued
concerns about the state of the health of the Japanese
economy.
The euro was last up 0.3 percent at $1.2742 <EUR=> while
sterling was up 1 percent at $1.4335 <GBP=>.
The dollar was up 0.5 percent against the yen at 98.15 yen
<JPY=>, just below the session high.
Sales of newly built U.S. single-family homes slumped to a
record low in January, while prices fell to their weakest level
in five years, according to a government report on Thursday
that highlighted the continued distress in the housing market.
[].
The housing report followed earlier reports that showed U.S.
durable goods fell for a sixth consecutive month to a six-year
low in January, while the number of U.S. workers continuing to
claim jobless benefits notched a fresh record in the second
week of February, with new claims at the highest level since
1982. [] and [].
"The weak reports reinforce the view that problems in the
U.S. economy are more significant than what had been priced in
the market and and that's why we're seeing some bids in the
dollar," said Matthew Strauss, senior currency strategist at
RBC Capital Markets in Toronto. "For now, that should cap risk
appetite in the market."
The data overshadowed, at least for now, a forecast from
U.S. President Barack Obama for a $1.75 trillion budget deficit
for the world's largest economy, amounting to 12.3 percent of
GDP -- a figure that analysts said could prove negative for the
dollar.
"There are some good things in this budget but a lot still
seems very wasteful," said Cook of IG Markets. "They have to
plug the holes, they can't just keep bailing water out of the
sinking ship."
STERLING
Sterling remained within a half cent of a session high
after Britain launched a plan which could end up insuring more
than 500 billion pounds worth of toxic assets in a bid to spur
lending in the recession-hit economy. [] and
[]
The announcement of the plan came after Royal Bank of
Scotland reported a 24 billion pound loss. []
In other news, Germany's chancellor Angela Merkel said on
Thursday that euro-zone states will continue to show solidarity
with each other, her strongest signal that Germany may be
prepared to help weaker members of the bloc. []
The yen remained the one other key focus of foreign
exchange markets, shedding more than 7 percent against the
dollar in 2009. As short-term speculators are forced to unwind
bets it would strengthen, the currency moves even lower.
The dollar rose as high as 98.19 yen on Thursday, according
to Reuters data, its highest since mid-November.
Bank of Japan board member Tadao Noda said on Thursday the
economy may worsen more than the central bank had forecast in
January. []
(Additional reporting by Steven C. Johnson and Gertrude
Chavez-Dreyfuss in New York, and Farah Master in London)
(Reporting by Nick Olivari; Editing by Theodore d'Afflisio)
