Dollar gains as European debt worries linger while US economic reports show strength

Dollar gains on strong US data as euro woes linger

NEW YORK — The dollar rose Wednesday as reports on housing and manufacturing suggested continued economic recovery in the U.S. even as worries persist over Europe’s debt crisis and slower economic growth there.

The euro dropped to $1.2204 in late New York trading from $1.2315 late Tuesday. It hit a four-year low of $1.2146 last Wednesday.

The U.S. government released more evidence Wednesday of an increasingly strong recovery from the recession.

Orders for major manufactured products rose 2.9 percent in April, the biggest gain in three months. The housing sector also got a shot in the arm as the Commerce Department said sales of new homes soared 14.8 percent last month. A federal tax credit for homebuyers expired at the end of April, encouraging U.S. residents to purchase homes.

The euro has dropped about 15 percent against the dollar this year as traders take a dimmer view of Europe’s prospects and the strangling effect of deep government spending cuts. Indebted European countries are cutting spending to get their budgets back in line with European Union mandates.

The prospect of a banking crisis in Spain, precipitated by the bailout of a regional savings bank over the weekend, is also weighing on the euro. Spain is the No. 4 economy in the 16-nation euro monetary union.

Other trading was mixed. The British pound rose to $1.4420 from $1.4366, while the dollar slipped to 90.12 Japanese yen from 90.15 yen and edged up to 1.1593 Swiss francs from 1.1586 francs.

The U.S. currency dropped to 1.0636 Canadian dollars from 1.0752 Canadian dollars. It also lost ground versus the Australian dollar, Brazilian real and Mexican peso as prices of commodities rose.

Currencies from countries that are big commodity exporters tend to gain as traders opt for riskier bets because of better-than-expected economic news.

Emerging-market currencies in Asia also gained, except for the South Korean won. South Korea is in a tense standoff with North Korea, blaming its northern neighbor for a sunken warship.