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On a
day dominated by a handful of publications by the world's major
central banks, caution over the minutes of the Fed's September
meeting also prodded the dollar as much as a third of a percent
lower against the yen and 0.6 percent lower against the Swiss
franc.
Dealers said any further gains for the euro were likely to be
capped around $1.1320, keeping it within a range it has held
since the aftermath of the Fed's rate decision on Sept. 17.
"There is just a little bit of caution ahead of the Fed
minutes," said Ian Stannard, head of European FX strategy at
Morgan Stanley in London.
"These are big risk factors for the market and that may cause a
pause, but after that we would expect that more risk-positive
environment to bounce back. We are relatively positive on some
of the emerging market and commodity-related currencies in the
near term."
The dollar eased 0.2 percent to 119.78 yen, inching away from
this week's high of 120.57 yen set on Tuesday. By 1125 GMT, the
euro was up 0.5 percent on the day at $1.1295.
The yen, traditionally a safe haven for investors in times of
economic stress, has benefited from the volatile mood on stock
markets since August amid broader concerns over the pace of
global growth.
Although Shanghai shares climbed 3.4 percent as Chinese markets
resumed trade after being on holiday since the start of the
month, European equity markets were reluctant to push higher.
In the currency world, however, Morgan Stanley's Stannard is one
of the analysts who have begun to talk up the chances of a
rebound for emerging market currencies as well as those most
closely linked to commodities prices into the year end.
"The bearishness on China has possibly been overdone somewhat,"
said Tobias Davis, a currency hedging manager with Western Union
in London. "But I would be very cautious in getting marginally
bullish."
Sterling gained strongly in morning trade before the Bank of
England's decision and statement on interest rates, but it fell
back after the minutes gave little in the way of new guidance on
policy while playing down the impact of the problems in some
emerging markets. Sterling was flat on the day at $1.5314 half
an hour after the decision.
Similarly, the euro dipped marginally after the publication of
minutes from the European Central Bank's last meeting.
(Editing by Hugh Lawson/Ruth Pitchford)
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