TOKYO The dollar was subdued on Wednesday as traders took stock of nervous markets after the U.S. currency's advance against its major rivals stalled amid crumbling crude oil prices and concerns about the global economy.
The dollar stood flat at 117.645 yen. The greenback had risen as far as 118.115 overnight on a bounce in battered crude oil prices. But it gave up those gains after the rise in the commodity proved temporary. The dollar also slipped against the Swiss franc, another safe haven.
The U.S. currency failed to make much headway against the euro, which stood unchanged at $1.0906.
With the ebb and flow in risk appetite having dictated movements in major currencies so far this year, the focus remained on the fortunes of the commodity and equity markets.
"The performance of equities, particularly Wall Street, dictates the direction of dollar/yen. Equities have developed a relatively strong correlation with crude, and if the fall by the commodity should continue, we could see dollar/yen slip below 116.00 soon," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
U.S. crude slid to its lowest level since 2003 after the International Energy Agency said the global oil glut was set to last until at least late 2016 due to unseasonably warm weather and rising supply.
The dollar briefly touched a 4-1/2-month low of 116.51 yen last week when tumbling oil prices and fears of a China-led global economic slowdown pummelled risk assets.
The greenback will look for potential relief in the U.S. housing, construction and consumer price data due later in the session. Upbeat numbers could help shore up prospects of the Federal Reserve hiking interest rates again and support the dollar.
Sterling struggled near a seven-year low after being hit overnight by dovish comments from Bank of England Governor Mark Carney. The BOE head said he had no set timetable for raising interest rates, warning of more damage to come from a slowing Chinese economy.
The pound was at $1.4176 after falling to $1.4130 on Tuesday, its lowest since March 2009.
The Australian dollar, often used as a proxy for China-related trades, was down 0.1 percent at $0.6901. The Aussie had surged 0.6 percent overnight as battered Shanghai shares rallied, and the focus remains on whether Chinese equities can sustain their gains.
(Editing by Shri Navaratnam)
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Updated Date: Jan 20, 2016 06:45 AM