The dollar showed mixed movement in morning trading Tuesday in New York, as the lack of significant reports on the U.S economic front led traders to look ahead to the influx of grim corporate earnings figures later in the day. The lack of conviction on the day also came as investors are considering a wide range of economic data from overseas economies.
The buck posted moderate gains against the euro, with traders digesting disappointing gross domestic product figures from the Eurozone. Meanwhile, the greenback weakened against the sterling after gaining some ground the previous day. Against the yen, the dollar edged higher while the Bank of Japan voted to keep its key interest unchanged.
The dollar moved higher against the euro in late morning. With the advance the buck further recouped last week's losses against the Eurozone currency. At about noon ET, the dollar climbed to a level of 1.3272. The pair has traded in a range for the past two weeks after the euro reached a multi-week high of 1.3737 against the buck in mid-March.
Tuesday, a final report from the Eurostat showed that economic contraction in the European Union was worse than initially estimated.
Eurozone gross domestic product contracted by a record 1.6 percent quarter-on-quarter in the final three months of 2008. The pace of decline was slightly up from the previously estimated fall of 1.5 percent.
The statistical office also revised fourth-quarter annual GDP decline to 1.5 percent from an initial 1.3 percent fall. For the whole year, the economy expanded 0.8 percent, slower than 2.6 percent growth recorded in 2007.
Meanwhile, the buck began to give away its recent gains against the sterling as the pound recorded a level of 1.4761 in the late morning, compared to midnight's level of 1.4655. With the pound's recovery, the dollar moved off of a multi-day high of 1.4599.
UK's Office for National Statistics reported 6.5 percent decline in UK manufacturing output during three months to February compared with the three months to November 2008. This was the biggest decline since 1968. Output was 12.2 percent lower than the same period a year ago.
Industrial production declined 1 percent month-on-month in February. Economists had expected output to fall 1.2 percent in February, following a 2.7 percent decrease in January.
Moving into the early afternoon hours, the buck continued to hover above the 100 mark posting a level of 100.58, just above its overnight quote. Late last week, the greenback was able to break the psychologically important 100 mark, after speculation of a third stimulus package for Asia's largest economy contributed to weakness in the yen. Last week's advance brought the dollar to its highest level against the yen since early November.
Tuesday, the Bank of Japan retained its key interest rate, but it decided to expand the range of eligible collateral in order to make funds easily available.
The Policy Board of Japan's central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1 percent. The decision came in line with economists' expectations. The previous change in interest rates was a 20 basis point cut implemented in December 2008.
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