The dollar fell against major currencies as its safe haven appeal faded and traders turned attention to global equities and riskier currencies instead.
European, US and Asian stock markets all managed gains Wednesday on hopes that a global economic recovery is not too far away.
Economic data from China however poured cold water on some of that optimism. An official report showed a surprise 15% decline in February imports as demand from China continues to slow.
The dollar index fell to 87.719 from 88.627 in late US trading Tuesday. The dollar fell to 97.48 yen from 98.70 yen in the previous session.
The euro rose against the dollar, after a weak start to Wednesday’s session, as European stock markets settled in the blue. The euro was the main beneficiary of increased risk appetite Wednesday. The euro rose to $1.2828 from $1.2679 Tuesday.
Sterling meanwhile remained under pressure against the euro on ongoing concern about the outlook for the UK economy.
Traders were little moved by news that the Bank of England pumped almost £2bn of extra money into the financial system in the hope it will get banks to lend more money. The move is part of its £75bn programme of ‘quantitative easing’ to boost the British economy.
Sterling rose against the dollar to $1.3851 from $1.3743 while the euro rose 0.8% to 92.90p against the pound after hitting a high of 93.01p.
Commodities trading report:
US crude oil dropped 7% on Wednesday after a weekly government report showed US crude supplies rose by 700,000 barrels last week instead of the 1m barrel decrease expected by analysts.
US light crude oil for April delivery settled down $3.38 to $42.33 a barrel on the New York Mercantile Exchange.
Concern about a continuing slump in demand weighed on crude prices after a separate report from China showed a surprise 15% decline in February imports as demand continues to slow.
Meanwhile the US government report showed gasoline inventories fell by 3m barrels more than double than the 1.2m barrels reduction expected.
Expectations that oil cartel OPEC will call for another round of output cuts had little effect. OPEC is scheduled in meeting 15 March in Vienna.
Among precious metals gold rose back above the key $900 an ounce level as the dollar boosted the yellow metal’s appeal as an alternative investment. COMEX gold for April delivery rose $14.80 to settle at $910.70 an ounce.
May silver rose 26 cents to $12.80 an ounce while May copper fell 6 cents to $1.63 a pound.
