By Ye Xie Dec. 24 (Bloomberg) -- The dollar traded at almost an eight-week high against the yen as orders for durable goods excluding transportation items increased more than economists estimated and initial jobless claims fell. The U.S. currency erased an earlier decline as the yield advantage of holding Treasuries instead of Japanese debt rose to the widest since August 2008. South Africa’s rand was the biggest winner versus the dollar among the 16 most-traded currencies as gold and other precious metals rallied. “If we continue to see upside surprises in the U.S. economy, there’s little doubt that it will provide further momentum to the dollar’s recovery,” said Matthew Strauss, a senior currency strategist at Royal Bank of Canada, Canada’s biggest bank by assets. The dollar was little changed at 91.69 yen at 10:35 a.m. in New York, after earlier dropping as much as 0.6 percent. It touched 91.87 yesterday, matching the highest level since Oct. 27. The euro increased 0.3 percent to 131.78 yen, from 131.38. The dollar slid 0.3 percent to $1.4373 per euro, from $1.4337. The U.S. currency appreciated to $1.4218 on Dec. 22, its strongest level since Sept. 4. The U.S. currency declined against the euro on speculation the greenback’s biggest December rally since the European currency’s 1999 debut may be difficult to sustain. The 14-day relative strength index of the dollar versus the euro fell below 70 yesterday for the first time in five days. A reading above that number signals a change in direction may be imminent. Moving Average The greenback strengthened to within a quarter-cent of its 200-day moving average of $1.4198 before yesterday’s decline. The dollar has gained 4.4 percent versus the euro in December, paring its 2009 drop to 2.8 percent. The yield on the 10-year Treasury note was 2.51 percentage points higher than the rate on the similar-maturity Japanese bond today, the biggest advantage in more than a year. Orders for durable goods excluding transportation equipment increased 2 percent last month, the Commerce Department reported today. The median forecast of 46 economists in a Bloomberg survey was for a 1.1 percent advance. Fewer Americans than expected sought unemployment benefits last week, figures from the Labor Department showed. Initial jobless claims fell by 28,000 to 452,000, the lowest level since September 2008. The franc traded at almost a nine-month high against the euro on speculation the Swiss National Bank will refrain from trying to limit its currency’s gains. Franc Versus Euro The Swiss currency fetched 1.4913 per euro after reaching 1.4850 three days ago, the strongest level since March 12. On that day, the central bank bought foreign currency to limit the franc’s appreciation and support Switzerland’s economy. Goldman Sachs Group Inc. strategists said they were “stopped out” of a bet that the franc would fall against the Swedish krona. Swiss economic growth has “surprised to the upside,” while “the SNB’s recent notable absence in the currency market has also afforded the franc more room to strengthen,” the Goldman Sachs strategists wrote in an e-mail message yesterday. “We were stopped out of the trade today with a potential loss of around 3.7 percent.” The franc has gained 4.4 percent to 7.0282 kronor since the end of July, when Goldman Sachs made the recommendation. Traders typically place stop losses at key levels to protect themselves when a bet moves in the opposite direction. The rand gained as much as 1.8 percent to 7.4732 versus the dollar, the strongest level in a week, as a rally in gold and platinum boosted earnings prospects for South Africa, the world’s biggest producer of precious metals. Bullion for February delivery increased 0.6 percent to $1,100.10 an ounce as the drop in the dollar versus the euro encouraged investors to buy precious metals as an alternative investment. Platinum climbed 2.7 percent to $1,459 an ounce. To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

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