Euro can't sustain $1.30 mark; sterling keys on interest-rate faceoff
By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The dollar was flat to lower Wednesday, slightly extending a loss versus the Japanese yen while seeing little movement versus other currencies after U.S. durable-goods orders showed an unexpected June drop.
The dollar index (DXY 82.07, -0.12, -0.15%) , which tracks the greenback against a basket of major currencies, was slightly lower at 82.123 versus 82.200 in North American trade late Tuesday.
The euro (CUR_EURUSD 1.2996, -0.0003, -0.0231%) , which failed to maintain an earlier push above the $1.30 level, slipped to $1.2980, down slightly from $1.2989 in North American trading late Tuesday. Read Forex Files column on the euro and the debt crisis.
Against Japan's yen, the euro (CUR_EURYEN 113.9800, -0.2900, -0.2538%) erased an early gain to stand at ¥113.82, off slightly from ¥114.05 late Tuesday.
The dollar, meanwhile, slightly extended a loss versus the yen (CUR_USDYEN 87.6700, -0.2200, -0.2503%) to trade at ¥87.56, down from ¥87.82 late Tuesday. The yen tends to be among the largest beneficiaries of declines in risk appetite.
The Commerce Department said orders for durable goods fell 1% in June, defying expectations for a 1% rise. Read about June durable goods.
"A certain amount of regrouping appears to be under way as investors try to size up the risks to the growing theme that world growth continues, albeit modestly," said Andrew Wilkinson, strategist at Interactive Brokers in Greenwich, Conn. "That's the glass half-full version of what some believed might mark the onset of a double-dip recession."
The British pound (CUR_GBPUSD 1.5622, +0.0028, +0.1796%) traded at $1.5601, up 0.1%. The currency showed little reaction to testimony by Bank of England Governor Mervyn King and other central bankers, including Andrew Sentence, before a parliamentary committee. Read about the testimony.
King said the economy still needs monetary stimulus, though the central bank could move to either add or scale back the degree of stimulus in the future. Meanwhile, Sentance made clear he sees the recent jump in second-quarter gross domestic product as vindication of his lone dissents in June and July in favor of implementing hikes in the bank's key lending rate of a quarter of a percentage point.
Howard Archer, chief U.K. economist at IHS Global Insight, said he believes the Bank of England will "choose to remain in 'wait-and-see' mode so they can monitor how well U.K. economic activity holds up after the second quarter spike in activity, how sticky inflation remains and whether or not there is a significant, sustained spike up in inflation expectations."
Meanwhile, the Australian dollar (CUR_AUDUSD 0.8932, -0.0078, -0.8657%) fell against its U.S. counterpart.
Australia's consumer price figures for the second quarter rose less than economists had expected, trimming the likelihood for another central-bank rate hike.
The Australian Bureau of Statistics reported the increase in the consumer price index at 0.6%, smaller than the 1% expected. It also said the gauge was up 3.1% from the year-earlier second quarter, less than the 3.4% rise expected. Read more on Australian price data.
The smaller-than-expected increase suggested that the Reserve Bank of Australia will keep its policy rate unchanged at 4.5% when it meets on Aug. 3.
