The U.S. dollar slipped versus the Japanese yen on Wednesday, but held its ground versus other major rivals.
The dollar index a measure of the greenback against a trade-weighted basket of currencies, rose slightly to 86.605, up from 86.483 in North American trade late Tuesday.
The dollar fell to 97.89 yen versus the Japanese currency, down from 98.63 yen. The yen rose as Asian equity markets posted a mixed session.
The euro traded at $1.2953 versus the dollar, up slightly from $1.2944 late Tuesday.
"In the absence of any key economic data out of the U.S., [euro/U.S. dollar] will continue to take guidance from the direction in equities," wrote strategists at Commerzbank in Frankfurt.
"However, yesterday's failure to move back above the $1.30 area despite higher equities and the bounce in the German ZEW index indicates that the overall sentiment remains weak and recoveries towards the $1.30 area should be seen as selling opportunities."
Since last year, the euro has tended to move in the same direction as equity markets, while the dollar and yen have held an inverse relationship with shares. That relationship is no longer as strong as in the past, however, with the dollar recently gaining ground as equities rose.
The British pound was on the defensive ahead of Chancellor of the Exchequer Alistair Darling's presentation of the annual budget at 12:30 p.m. local time, or 7:30 a.m. Eastern time.
The pound slipped to $1.4626 versus the dollar, down from $1.4671 late Tuesday.
Ahead of the budget, the Office for National Statistics reported that unemployment rose less than expected in March but still hit a 12-year high. At the same time, government borrowing in March rose more than expected, putting the total for the recently completed fiscal year at 90 billion pounds ($131.6 billion). See full story.
That's up from 34.6 billion pounds the previous year and well above the government's November forecast for a rise to 78 billion pounds. Many economists expect Darling to forecast a deficit of around 170 billion pounds or more in the current financial year -- pushing the deficit into double-digit figures as a percentage of GDP -- as a result of plunging tax receipts as the economy suffers what's expected to be the deepest recession since World War II.
Meanwhile, the Bank of England said M4 money supply grew at an annual pace of 17.6% in March, slowing from 18.6% in February. Also, minutes from the Bank of England's April Monetary Policy Committee meeting showed policy makers voted 9-0 to continue the central bank's 75 billion pound asset purchase program, part of an unprecendented quantitative easing strategy designed to effectively boost the money supply, lower borrowing costs, spur spending and avert a deflationary spiral.
Given the money supply data and the tone of the minutes, "our instinct tells us that at this point, the Committee may be tilted towards more aggressive or increased [quantitative easing] in coming months rather than less," said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
