27.08.201305:57:28UTC+00Dollar skyrocket with September taper seen intact

The dollar moved higher versus the majority of its 16 most-traded counterparts as a worse-than-estimate U.S. report on durable goods failed to damp the idea that the Federal Reserve will begin on trimming bond purchases next month.

The Bloomberg U.S. Dollar Index pared an advance after after Secretary of State John Kerry supported the president will hold Syria's government accountable for the “moral obscenity” of using chemical weapons. The Turkish lira sag down to the worst state on record as the central bank supplies funds to banks at its standard rate for the first time in six days. The Mexican peso pulled back the most among the major currencies on concern Fed tapering will speed the flow of cash out of emerging economies.

Kerry, Syria

The dollar extended losses against the yen after Kerry told reporters in Washington President Barack Obama “believes there must be accountability for those who would use the world’s most heinous weapons against the world’s most vulnerable people.”

Lira Sags down

Turkey’s lira fell to as low as 1.9995 per dollar and was down 0.5 percent to 1.9967 in Istanbul.

“The central bank provided liquidity and this added to negative factors,” Burcin Metin, head of currency trading at ING Bank AS in Istanbul, said by phone. “There are no reasons at the moment to be positive about the Turkish lira.”

Options Trading

Trading in over-the-counter foreign-exchange options totaled $16 billion, compared with $17 billion on Aug. 23, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate amounted to $4.6 billion, the largest share of trades at 29 percent. Options on the euro-dollar rate totaled $1.7 billion, or 11 percent.

‘Softer Note’

The durable-goods report “does suggest that in the third quarter, overall business investment might be somewhat starting off on a softer note than some forecasters may have anticipated,”Robert Lynch, a currency strategist at HSBC Holdings Plc in New York, said in a phone interview. “I wouldn’t necessarily see big extension of dollar losses on the back of that. But without much more to go on today, it’s providing some motivation for shorter-term dollar weakness.”

The Fed’s debate over when it will slow its $85 billion in monthly bond purchases known as quantitative easing has roiled global financial markets over the past three months. U.S. policy makers hold their next meeting on Sept. 17-18.

The dollar strengthened 4.9 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The euro is the best performer, rising 6.4 percent, while the yen slumped 9 percent.