AFP - The dollar rose on Wednesday as upbeat US economic data strengthened prospects that expected US Federal Reserve monetary easing measures may be less aggressive than previously thought.
In trading here, the dollar climbed to 81.89 yen from 81.43 late in New York on Tuesday, having pulled away from a 15-year low level of 80.41 that was struck on Monday.
The European single currency meanwhile slid to 1.3809 dollars from 1.3857 dollars on Tuesday.
Next week's Federal Open Market Committee meeting is expected to unveil new stimulus measures to boost the country's jobless recovery, dealers said.
And the first estimate of third-quarter US gross domestic product, due on Friday, could play a key role in the central bank's decision on quantitative easing (QE) measures.
"The US dollar regained some ground on the back of slightly better than expected consumer confidence and Richmond Fed numbers for October yesterday," said CMC Markets analyst Michael Hewson.
"With US GDP numbers looming on Friday, US dollar sellers now appear to be in the process of locking in some profit.
"With the FOMC decision only a week, away an element of caution is now starting to permeate into the markets psyche as thoughts turn to what steps the Fed might take next week with respect to the form that any measures would take in a stimulus package."
The greenback has slumped this month on expectations that the Fed will print more money to inject cash into its banking system and stimulate growth, diluting the value of the currency.
But it was boosted overnight by "a jump in US bond yields which suggested that investors believed Fed quantitative easing would improve economic growth and increase inflation from its currently very low level," said National Australia Bank's John Kyriakopoulos.
Some analysts think that the widely expected QE measures could be less robust than expected.
The Wall Street Journal reported the central bank would likely unveil a US Treasury bond purchase programme worth a few hundred billion dollars over several months, contrasting with purchases of nearly two trillion dollars during the financial crisis.
Investor caution lingered after efforts by Tokyo to talk down the yen, signalling it may be prepared to intervene despite a weekend G20 agreement to "refrain from competitive devaluation of currencies".
Japan has reduced its official interest rate to almost zero and last month intervened in the foreign exchange market for the first time in six years to sell the yen.
But the moves have failed to halt the Japanese currency's ascent. Markets are awaiting the outcome of a Bank of Japan policy meeting this week to see if further measures are announced.
In London on Wednesday, the euro changed hands at 1.3809 dollars against 1.3857 dollars late in New York on Tuesday, at 113.09 yen (112.83), 0.8739 pounds (0.8744) and 1.3687 Swiss francs (1.3634).
The dollar stood at 81.89 yen (81.43) and 0.9912 Swiss francs (0.9839).
The pound was at 1.5802 dollars (1.5840).
On the London Bullion Market, the price of gold climbed to 1,332.85 dollars an ounce from 1,329.50 dollars an ounce late on Tuesday.
