By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The dollar traded little changed versus most major rivals Friday but held a small gain on the euro as weekend elections in Spain held investors’ attention.
The dollar index DXY +0.28% , a measure of the U.S. unit against a basket of six major currencies, stood at 75.139, up from 75.106 late Thursday.
DXY 75.33, +0.21, +0.28%
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“Yesterday’s rangy activity seems likely to continue through today given the lack of any major U.S. data,” said Adrian Schmidt, currency strategist at Lloyds TSB. “It is clear that the latest U.S. numbers have been on the weak side, but some of this certainly seems related to supply-chain issues due to the Japanese earthquake.”
It will probably take evidence of significantly more weakness in the United States and in the global economy to trigger a rush into long positions in the dollar, he said. The greenback tends to benefit from falling risk appetite as investors seek safe havens.
The euro USDEUR -0.0570% slipped to $1.4271, down from $1.4308 in North American trading late Thursday.
The Wall Street Journal on Friday reported that weekend regional and local elections in Spain, which could drive the ruling Socialist party from power in many locations, could reveal piles of unrealized debt.
Still, pressure on the shared currency remained modest.
Investors are of the expectation that the European Central Bank will have no choice but to keep raising interest rates in order to fight inflationary pressures, while the Federal Reserve is expected to remain on hold as far as U.S. monetary policy goes, said Jane Foley, senior currency strategist at Rabobank.
Signs of an intensifying disagreement between some European Union officials and the European Central Bank over the potential for a restructuring of Greece’s debt also pose a danger, she said, but for now remain trumped by the focus on interest-rate differentials.
Also Friday, the British pound GBPUSD +0.04% bought $1.6244 compared with $1.6231 late Thursday.
No change from Bank of Japan
The dollar USDYEN +0.0122% eased to 81.57 Japanese yen from ¥81.61 in late North American trading Thursday. See real-time currency quotes and tools.
The dollar had initially edged higher on the yen in Asian trading, shrugging off a Bank of Japan decision to refrain from further easing.
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As had been widely expected, the central bank decided to keep its overnight call-rate target in a range of zero to 0.1% and maintained its basic outlook that Japan will pick up speed later this year as the nation recovers from March’s disastrous earthquake and tsunami. Read more on Bank of Japan.
Some investors had feared that Japanese institutions would repatriate huge quantities of funds after the disaster, and that this would push the yen higher. So far, though, repatriation hasn’t been a huge factor in currency markets.
“The degree of balance-sheet stress in the financial sector still looks manageable despite worries about debt waivers by banks and payout claims on insurers, tempering the risk of a repatriation-induced spike in the yen,” said Cameron Umetsu, economist at UBS Securities Japan.
William L. Watts is a reporter for MarketWatch in London.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
