By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar edged slightly higher in range-bound trade Wednesday, finding modest safe-haven support as European equities lost ground and U.S. stock-index futures pointed lower.
The dollar index DXY -.00% , which measures the U.S. unit against a basket of six major rivals, rose to 82.363 from 82.280 in North American trade late Tuesday.
The WSJ Dollar Index XX:BUXX +0.02% , which reflects the unit’s performance against a basket of heavily traded currencies, rose to 71.49 from a close of 71.44 on Tuesday.
“Range trading continues, and there is nothing on the calendar today to suggest that ranges will be broken, but the elastic is starting to look quite stretched,” wrote strategists at Lloyds Bank in London.
European equities were on the defensive, with the Stoxx 600 Europe index XX:SXXP -0.30% falling 0.3%. U.S. stock-index futures tracked slightly lower.
The British pound GBPUSD +0.27% traded at $1.5586, down from $1.5620. The Bank of England’s Quarterly Inflation Report later Wednesday is expected to drive trade.
Economists expect the central bank to cut its growth and inflation forecasts, clearing the way for further monetary easing, which tends to be negative for the currency.
Bank of England Gov. Mervyn King “will be questioned about whether and why [quantitative easing] and low rates are not boosting bank lending. He will promise more accommodation and the pound will remain under mild downward pressure,” Juckes said, in a note.
One euro EURUSD -0.29% bought $1.2384, down slightly from $1.2397 on Tuesday.
Continuing weak economic data will continue to limit upside potential for the shared currency, even if peripheral bond yields continue to decline, the Lloyds strategists wrote.
Gains for the euro are likely to become more difficult if the uptrend in equities halts at the approaching resistance, especially if the data remains soft,” they said.
Buying the euro versus the Swiss franc EURCHF -0.01% remains attractive due to the limited downside for the euro/Swiss franc cross, they said. The Swiss National Bank has vowed to prevent the euro from falling below 1.20 Swiss francs.
The euro traded at CHF1.2012 in recent action, little changed from Tuesday.
The dollar USDJPY -0.37% fell 0.4% versus the Japanese currency to fetch 78.30 yen.
Japanese Prime Minister Yoshihiko Noda is prepared to dissolve the country’s lower house of parliament “in the near future” and call for a general election in exchange for opposition parties’ support for doubling the consumption tax rate to 10%, according to a Kyodo News report. Read about Noda.
The Australian dollar AUDUSD +0.12% bought $1.0560 versus its U.S. counterpart, little changed from $1.0556 late Tuesday.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
