By William L. Watts and V. Phani Kumar, MarketWatch
LONDON (MarketWatch) — The U.S. dollar remained lower versus most major rivals in range-bound trade Wednesday, as equities and commodities gained ground and worries about Greece’s sovereign-debt problems moved out of the spotlight for now.
The U.S. dollar index DXY +0.13% , which measures the greenback against a basket of six global currencies, traded at 75.290, down from 75.441 late Tuesday in North America.
“Risk sentiment improved markedly after the London close yesterday, as commodities and equities turned higher from their respective lows. Improved risk appetite left U.S. dollar trading at the week’s low so far,” said Sue Trinh, Royal Bank of Canada’s senior currency strategist in Hong Kong.
Trinh said that although no key U.S. economic data were due for release Wednesday, markets may focus on minutes of the Federal Open Market Committee’s most recent policy meeting.
Among major currencies, the euro EURUSD -0.1545% bought $1.4244, up from $1.4219, trimming earlier gains.
Meanwhile, European Central Bank officials sought to dampen prospects for a restructuring of Greek sovereign debt after Jean-Claude Juncker, who chairs the group of euro-zone finance ministers, said Tuesday that a “soft restructuring” could be considered if Greece undertakes more fiscal measures. Read about Juncker’s comments on Greece.
In a speech in Milan, Lorenzo Bini Smaghi, a member of the European Central Bank’s executive board, reiterated his opposition to a restructuring, arguing that such a move could devastate Greek banks, Dow Jones Newswires reported.
ECB Vice President Vitor Constancio, in a panel discussion in Brussels, said restructuring should only be a “last resort,” Dow Jones reported.
Analysts at KBC Bank in Brussels said Greece and the sovereign-debt problems remain a concern, but that global risk sentiment would likely be the main driver for the euro/U.S. dollar pair Wednesday.
They contend the euro is set for further gains after hitting a correction low of $1.4048 Monday.
“From there, the pair is trying to establish a pattern of higher highs and higher lows,” they wrote. “The picture is still fragile, but this suggests that a bottoming-out process might be developing. We reinstall a cautious buy-on-dips strategy. A drop below $1.40 would be an indication that the bottoming process has failed.”
The British pound GBPUSD -0.78% weakened after the minutes of the Bank of England’s May 5 policy meeting were released. Sterling traded at $1.6151, down from $1.6246 Tuesday.
Chris Walker, currency strategist at UBS, said the minutes showed the Monetary Policy Committee’s inflation hawks were starting to turn more dovish.
According to the summary, the MPC again split 6-3 in favor of holding the key rate unchanged at 0.5%, with chief economist Spencer Dale and Martin Weale calling for a quarter-point rate hike and outgoing MPC member Andrew Sentance repeating a call for a half-point tightening.
The minutes showed Dale and Weale regarded the matter as “finely balanced,” with uncertainty over the economy’s strength, while Sentance is leaving the panel at the end of the month.
“So even the hawks are turning more cautious,” Walker said. “That is extremely important.”
The dollar USDYEN -0.36% was trading at 81.10 yen, down from ¥81.42.
