The dollar eased but stayed above record lows against the euro and a basket of major currencies on Wednesday as investors awaited key economic data later this week for more clues to the health of the US economy.
The euro trimmed losses made after European officials increasingly voiced their concern for the greenback's weakness, but it stayed away from its all-time highs against the dollar. The dollar has rebounded broadly since the start of the week from a sell-off prompted by a hefty Federal Reserve interest rate cut last month and expectations of more monetary easing.
The Australian dollar edged back towards 18-year highs as data showed strong retail sales and reinforced expectations that the Reserve Bank of Australia will keep its monetary tightening bias. The RBA held interest rates steady at 6.5 percent earlier in the session, as widely expected.
But activity was mostly subdued as many investors sat on the sidelines before the release of the US Institute for Supply Management's indicator on the service sector later in the session and the important jobs report on Friday. "Many people believe that the dollar's mid- to long-term downtrend is still intact and that it's only in a temporary stage of recovery," said a senior trader at a Japanese bank.
The euro rose 0.14 percent from late US trade on Tuesday to $1.4169, having retreated from a record high of $1.4283 hit on electronic trading platform EBS earlier this week. The dollar index, a gauge of the greenback's value against a basket of six major currencies, slipped 0.11 percent to 78.213, but was off a record low around 77.660 touched on Monday.
The dollar was steady at 115.77 yen and the euro rose 0.2 percent to 164.05 yen. Another focal point later this session will be the ADP National Employment Report for September. The ADP report for August had shown unexpectedly weak hiring by private companies, foreshadowing the first monthly payroll decline in four years in the Labour Department's job survey released last month.
The median forecast on the September ADP job reading is for an increase of 58,000 versus a gain of 38,000 in August, according to analysts polled by Reuters. "Rather than the numbers themselves, what might be more important is how equities react," said a trader for a Japanese trust bank, adding that the yen could struggle versus higher-yielding currencies if US share prices rise.
Gains in equities can bolster risk appetite and trigger a pick-up in carry trades, in which investors sell low-yielding currencies to buy higher-yielding and assets.
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