By William L. Watts, MarketWatch
LONDON (MarketWatch) — The Japanese yen posted modest gains versus major rivals, while the dollar was mostly higher as a revival in risk appetite fizzled amid ongoing worries about Japan’s nuclear situation and unrest in the Middle East.
A nearly 6% rebound by Tokyo’s Nikkei stock index (JP:NI225 9,094, +488.57, +5.68%) helped revive overall risk appetite, denting safe-haven flows into the Japanese yen and the U.S. dollar in Asian trade, strategists said.
But investors appeared reluctant to press equities and other assets perceived as risky further to the upside, with European stocks giving up early gains and U.S. stock-index futures pointing lower. See full report on U.S. stock-index futures.
The U.S. dollar (USDYEN 80.5700, -0.2000, -0.2477%) traded at 80.73 yen, unchanged from the level seen in North American trade late Tuesday. The euro (EURYEN 112.4900, -0.4500, -0.3982%) traded at ¥112.59, down from ¥113.
Japan fought to contain its nuclear crisis as workers faced a new fire and a possible breach of another reactor’s containment system at the Fukushima nuclear complex. Read about Japan's efforts to control its nuclear crisis.
“As the worries clearly remain, we see the strengthening of the dollar versus all currencies with the exception of the yen,” said Stephan Maier, currency strategist at UniCredit Bank in Milan, adding that there is currently “no strong rationale” to take a position against the dollar.
Continued unrest in Bahrain is also serving to undercut risk appetite, strategists said.
The statement by the Federal Reserve’s rate-setting Open Market Committee at the conclusion of Tuesday’s meeting served to reassure markets that quantitative easing would remain in place while also upgrading the U.S. central bank’s economic outlook, Maier said.
The dollar index (DXY 76.42, +0.09, +0.12%) , a measure of the U.S. unit against six major rivals, rose to 76.520 from 76.339 late Tuesday.
The euro (EURUSD 1.3961, -0.0028, -0.2001%) slipped to $1.3944 versus the dollar after changing hands at $1.40 late Tuesday. The British pound (GBPUSD 1.6108, +0.0026, +0.1617%) traded at $1.6076, off slightly from $1.6082.
The euro faced modest pressure on renewed doubts about Portugal’s ability to avoid a fiscal bailout. Moody’s Investors Service cut Portugal's rating by two notches to A3 from A1, putting its Portugal rating in line with Standard & Poor's.
An auction of 1 billion euros in 12-month debt saw borrowing costs rise. Meanwhile, the Portugal opposition has indicated it won’t support the minority government’s latest round of austerity measures, leading Prime Minister Jose Socrates to warn that failure to secure passage could force Lisbon to seek a bailout from the European Union and International Monetary Fund. Read about the Portugal debt downgrade.
The pound saw pressure after data showed a rise in the British unemployment rate to 8% from 7.9% in the three months ending in January, as the total number of unemployed hit a level last seen in 1994.
The figures offset an unexpected drop in the number of people claiming jobless benefits, which slipped to its lowest level since February 2009.
