The dollar hit a one-week low against the euro on Thursday as a plunge in U.S. durable goods orders supported the view of a U.S. economic slowdown on softer global demand.
The well-below-expectation reading in durable goods orders, which plunged 5.1% last month, raised the prospects of a weaker U.S. gross domestic product reading, due on Friday. Economists polled by Reuters had anticipated only a 0.6% drop in durable goods.
"This is a terrible number, in my opinion," said Fabian Eliasson, vice president for currency sales at Mizuho Corporate Bank in New York. "Couple that in with retail sales over the holiday, they didn't knock it out of the park – it's quite possible that the Q4 GDP is going to disappoint."
The huge decline in orders for planes, refrigerators and other big-ticket items would reduce an already anemic reading on the gross domestic product in the fourth quarter.
Economists polled by Reuters forecast a 0.8% increase in fourth-quarter GDP, slowing from a 2.0% rise in the third quarter.
The euro touched its highest since Jan. 20 against the dollar after the data was released. It was last up 0.2% to $1.0912.
The dollar pared earlier gains against the yen, falling as low as 118.66 yen, but resumed gains not long after, last up 0.2% at 118.90.
The dollar index fell near a session low of 98.710 after the data was released.