By William L. Watts and V. Phani Kumar, MarketWatch
FRANKFURT (MarketWatch)—The dollar gained ground Tuesday as global equities came under pressure amid worries over China’s growth outlook, but with major currency pairs holding their recent ranges.
The ICE U.S. dollar index DXY +0.12% , a measure of the greenback’s performance against six major global rivals, climbed to 79.673 from 79.451 late Monday.
The euro EURUSD -0.01% , which extended gains against the dollar for a third session Monday, fetched $1.3206, down from $1.3239 in late North American trading Monday.
After the recent rally in risk assets, currency pairs were likely to be confined to narrow ranges as some traders closed out some positions, said one analyst.
“Squeezing positions is the name of the [foreign-exchange] game as we enter into some range trading,” Societe Generale strategist Sebastien Galy wrote in a note to clients.
As Asian and European equities fell, U.S. stock-index futures pointed toward a lower start for Wall Street after China moved to raise fuel prices and miners warned that Chinese demand growth could slow significantly. Read Indications.
The Australian dollar AUDUSD -1.15% fell 1.1% versus its U.S. counterpart to change hands at $1.0486.
“Comments from BHP and Rio Tinto regarding slowing Chinese iron ore demand are not surprising in the light of the downgrade to growth targets by Chinese Premier [Wen Jiabao],” said Jeremy Stretch, currency strategist at CIBC in London. “But the rhetoric backs up a negative legacy for the Australian dollar, this as the currency correlates reasonably well with iron ore prices.”
The British pound GBPUSD -0.09% fetched $1.5839, down from $1.5896.
U.K. consumer price inflation slowed to an annual rate of 3.4% in February, a 15-month low, from 3.6% in January. Economists, however, had forecast a decline to 3.3%. On a monthly basis, inflation rose 0.6%.
“This suggests that the Bank of England can’t get complacent about price pressures in the U.K. as inflation may prove to be stickier than expected,” said Kathleen Brooks, research director at Forex.com in London.
With trading in the yen subdued due to a public holiday in Japan, the dollar USDJPY +0.07% rose to ÂĄ83.79 from ÂĄ83.36. The euro EURJPY -0.06% was changing hands for ÂĄ110.43, little changed from ÂĄ110.44 late Monday.
