Fading worries over a potential swine-flu pandemic and nervousness ahead of the release of first-quarter U.S. gross domestic product data and the conclusion of the meeting of Federal Reserve policy makers left the U.S. dollar under pressure versus most major rivals Wednesday. The dollar and the Japanese yen had benefited from a global flight-to-quality as investors sold equities on worries surrounding the potential impact of the swine-flu outbreak earlier this week. On Wednesday, the dollar index a measure of the greenback against a trade-weighted basket of currencies, fell to 84.569, down from 85.18 in North American trading late Tuesday. The Japanese yen, which had been the top beneficiary of safe-haven flows, was also on the retreat. The dollar gained ground versus the Japanese currency to trade at 96.88 yen, up from 96.36 yen late Tuesday. The previously hard-hit Mexican peso rose 0.4% versus the U.S. currency to trade at 13.7835 pesos per dollar. Strategists at BNP Paribas said the dollar and yen gained earlier in the week as investors used the swine-flu outbreak to liquidate short positions in the currencies. Nevertheless, "the overall environment of gradually improving risk appetite is broadly unchanged," they said, leaving the dollar and yen vulnerable to further weakness. Rising fears about the economic outlook and jitters over the financial sector have tended to lift the dollar and yen, with investors shunning riskier assets. Asian stock indexes closed higher early Wednesday and European equities were also on the rise. U.S. stock index futures pointed to a higher opening on Wall Street. Data due at 8:30 a.m. Eastern are expected to show U.S. first-quarter GDP fell by 5.1% in the first quarter, according to the median forecast of economists surveyed by MarketWatch, following a 6.3% annualized decline in the fourth quarter of last year. If accurate, that would mark the worst two-quarter decline in more than five decades. See full story. Later Wednesday, Federal Reserve policy makers will announce their decision on monetary policy. "With policy rates effectively at zero and given the announcement of the Treasury purchase plan last month, the upsizing of the [government-sponsored-enterprise mortgage-backed securities] and debt-purchase program, as well as the expansion of the TALF to legacy assets, it is hard to imagine anything new coming on the policy front," wrote economists at RDQ Economics in New York. Read about the Fed meeting. Analysts said the swine-flu outbreak still has the potential to affect markets, however. Reuters reported Wednesday that a U.S. government official confirmed the virus was responsible for the death of a 23-month old child in Texas, the first death reported outside of Mexico. The virus is suspected in more than 150 deaths in Mexico. U.S. officials have confirmed 65 cases of swine flu, most of them mild. Germany on Wednesday confirmed three swine-flu cases, news reports said. Health officials in Britain, Spain and New Zealand have also reported confirmed cases. The euro rose to $1.3238, up from $1.3141 late Tuesday. The European Commission's economic-sentiment indicator for the 16-nation euro zone rebounded to 67.2 in April from a record low of 64.7 in March, marking the first rise since May 2007, the EC said Wednesday. Economists had expected a more modest rise to 65.3. The rebound was led by improvements in consumer and industrial confidence. Economists said the data provided further evidence that the euro-zone's economic contraction will moderate in the second quarter after what was likely another sharp fall in the first three months of the year. "Overall, a little more upbeat than expected on the month, but the outright level of this indicator is still very depressed by historical comparison," said Alan Clarke, an economist at BNP Paribas.

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