Dollar rangebound, German data lifts euro

The dollar was trading within recent ranges against the other major currencies on Wednesday as ongoing uncertainty over the outlook for U.S. monetary policy saw investors remain cautious. 

During European late morning trade, the dollar was lower against the yen, with USD/JPY down 0.18% to 98.56.

Investor sentiment remained negative following last week’s unexpected decision by the Federal Reserve to keep its USD85 billion-a-month asset purchase program on track.

The Fed said it wanted to see more evidence of a sustained economic recovery before it reduced stimulus. The decision surprised markets, which had been expecting a modest reduction in bond buying.

Data on Tuesday underlined concerns over the outlook for the U.S. economic recovery. U.S. house prices were higher in July, but consumer confidence slipped lower in September, amid fears over whether economic momentum can be maintained in the months ahead.

Investors were looking ahead to U.S. data on durable goods orders and new home sales later in the trading day.

Elsewhere, the euro pushed higher against the dollar, with EUR/USDrising 0.29% to 1.3511. 

The single currency found support after data released on Wednesday showed that German consumer confidence is seen rising to the highest level since June 2007 in October.

The forward looking GfK index of German consumer confidence rose to 7.1, and this month’s reading was revised up from 6.9 to 7. 

The dollar was lower against the pound and the Swiss franc, withGBP/USD rising 0.16% to 1.6027 and USD/CHF losing 0.26% to trade at 0.9106.

Sterling was boosted after a report compiled by the Confederation of British Industry showed that its retail sales index rose to 34.0 in September from 27.0 last month, the highest level since June 2012. 
Analysts had expected the index to decline to 24.0.

Elsewhere, the greenback was broadly higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD down 0.30% to 0.9361, NZD/USD falling 0.59% to 0.8232 and USD/CAD edging up 0.05% to 1.0306.

In New Zealand, data on Wednesday showed that the trade deficit widened to NZD1,191 million in August, from a deficit of NZD774 million the previous month. Analysts had expected the trade deficit to narrow to NZD743 million.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.20% to 80.54.