By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar regained some ground versus major rivals in otherwise range-bound action Wednesday, boosted by safe-haven flows as U.S. equities faltered.
"The market is vexed with uncertainty and uncertainty is one of the main ingredients of a range-bound market," said Jessica Hoversen, a Chicago-based currency strategist at MF Global Research, in a strategy note.
"Today's trade continues to focus on earnings and the economics calendar," she said.
The dollar index (DXY 79.25, +0.40, +0.50%) , which tracks the greenback against a trade-weighted basket of six major currencies, rose to 79.141, up from 78.863 in North American action late Tuesday. The index slipped to a new 2009 low below 78.40 earlier Tuesday.
One euro bought $1.4103, down from $1.4160 late Tuesday. The British pound bought $1.6366, down from $1.6433.
The dollar rebounded from earlier losses Tuesday as U.S. stocks lost ground. Asian shares saw a mixed finish early Wednesday. European shares were higher, while U.S. stock index futures pointed to further weakness for Wall Street. See Indications.
U.S. June durable goods orders data are scheduled for release at 8:30 a.m. Eastern, and are expected to post a decline after a 1.8% rise in May. The Federal Reserve's "beige book," a compilation of anecdotal economic observations from regional Fed banks, will be released at 2 p.m.
The European Central Bank's quarterly lending survey showed banks continued to tighten credit conditions in the second quarter, although at a milder rate than in previous quarters.
Meanwhile, consumer price inflation data from German regions indicate the euro-zone's largest economy likely saw negative inflation in July.
"While a rebound in inflation is expected towards the end of the year, for now it seems likely that the ECB (European Central Bank) will maintain its policy of generous liquidity provision," wrote Jane Foley, head of market research at Forex.com.
Lending data from the Bank of England showed lending to the U.K. household sector and non-financial corporations continued to slow in June.
June mortgage approvals continued to rise, however, to total 47,600, up from 44,200 in May.
The U.S. dollar bought 95.03 yen, up from 94.51 yen in late North American trading on Tuesday and erasing a small loss seen earlier Wednesday.
"Improving risk appetite should tend to foster [U.S. dollar] drops versus European and commodity currencies and broad [Japanese yen] declines on Japanese capital outflows," said Tomoko Fujii, a rates and currency strategist at Bank of America Securities-Merrill Lynch Japan.
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"However, given sharp [Japanese yen] gains in the risk asset correction phase in the first half of July as well as global investors' continued reductions of the net underweighting of Japanese equities and a bottoming of Japan's external surplus, we now expect a more moderate downward path" for the yen, she said in emailed comments.
The bank now expects the dollar to rise to 100 yen at the end of the third quarter of 2009, compared with a previous estimate of 105 yen. It forecasts the greenback to buy 105 yen at the end of the fourth quarter, down from a previous forecast of 110 yen, and 110 yen at the end of the first quarter of 2010, down from 112 yen.
