The U.S. dollar was mixed Wednesday, with recent upside momentum capped as rising equity markets cut safe-haven flows to the greenback, strategists said.
Asian markets advanced Wednesday, taking their cue from a late Wall Street rally. Overall sentiment was further boosted by President Obama's address before a joint session of Congress. Read Asia Markets.
Returning risk appetite helped lift Europe, boosting bank shares. U.S. stock index futures, meanwhile, pointed to a flat start by Wall Street. See Europe Markets. Read Indications.
The moves initially left the dollar on the defensive against most major currencies, except for the broadly weaker Japanese yen. The greenback later gave up some of its recent gains versus the yen, while rising versus the euro and the British pound.
The dollar index , a measure of the greenback against a trade-weighted basket of six major currencies, was slightly lower at 87.333 compared with 86.781 in late North American activity Tuesday.
The euro slipped to $1.2791 versus the dollar from $1.2868.
The dollar fetched 96.57 yen, down from 96.73 yen late Tuesday. The dollar had earlier hit a three-month high at 97.30 yen, according to FactSet.
The British pound slipped 1% versus the dollar to $1.4371, while the euro gained 0.3% against sterling to trade at 88.95 pence.
The yen had tumbled to new lows after government data showed Japanese exports posted a record fall in January, pushing the trade deficit to a record 952.6 billion yen ($9.92 billion). See full story.
"The fundamental case for a weaker Japanese yen has become more pressing with Japan reporting its fourth monthly trade deficit in a row, suggesting that the current-account surplus will melt down further, reducing commercial yen buying needs," wrote strategists at BNP Paribas. "We firmly underline our bearish JPY call and suggest using today's likely (dollar/yen) downward correction to buy into weakness."
Germany on Wednesday said fourth-quarter gross domestic product posted a 2.1% fall, matching a previous estimate and matching economists' expectations.
The euro zone's largest economy has also seen exports plunge amid a massive global slowdown.
The U.K. Office for National Statistics confirmed an earlier estimate pegging the quarterly decline in British GDP over the final three months of 2008 at 1.5% -- the steepest fall since 1980. The third quarter was downwardly revised to show a 0.7% contraction following an earlier estimate of a 0.6% fall.
The data showed a 0.7% quarterly fall in real consumer spending and a 2.3% fall in investment.
