RTRS: Dollar, yen edge lower as markets assess risks
The dollar and yen edged lower on Wednesday as equity markets reversed early losses, prompting investors toward perceived riskier assets.
But market players were wary of taking on large positions with a dearth of economic data. So they took a cue from equities.
"We are still in a consolidation phase as markets try to determine whether an economic recovery would take hold later this year," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
"But players are cautious of becoming too pro-risk without seeing hard data."
At 0750 GMT (3:50 a.m. EDT) , the euro was up 0.1 percent at $1.3643. Technical analysts say the pair faced heavy chart resistance above $1.37 at May and March highs.
The single currency was also up 0.1 percent at 131.08 yen after falling to around 129.70 yen earlier in the global session.
Investor confidence was somewhat buoyed as European stocks pared early losses to rise 0.7 percent while U.S. stock futures were also higher after a mixed close on Wall Street on Tuesday.
Markets showed little reaction to German producer prices which fell a bigger-than-expected 1.4 percent in April from the previous month, the sixth monthly decline.
Meanwhile, sterling also gained, after rising to a five-month high on Tuesday as pessimism about the UK economy and financial sector eased.
The pound was up 0.3 percent at $1.5514.
Traders will keep an eye on minutes from the Bank of England's latest policy-setting meeting, when it unexpectedly expanded its asset buying program.
Minutes from the U.S. Federal Open Market Committee's meeting on April 28-29 will also be released later in the day.
Earlier, data showed Japan's economy shrank a record 4.0 percent in the first quarter as companies slashed investment and exports, but economists saw a return to modest growth in the coming quarters even if the longer-term outlook remains unclear.
"This is of course a very bad number, but it was in line with expectations and is neutral in terms of market impact," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.
"I expect there to be a growing consensus in the market that this is the bottom for the economy and that we will start to see a recovery from here."
