Dollar inches down

The dollar edged down against the euro on Wednesday on uncertainty about the effectiveness of the US government's proposed $700 billion bailout plan to tackle the financial crisis. But the US currency erased earlier losses and gained against the yen after news of Warren Buffett's Berkshire Hathaway Inc investing $5 billion in Goldman Sachs Group Inc sent US equity futures shooting up in Asian trade.
"At the end of the day the dollar still remains in range. The main focus is on whether the US Congress will approve the rescue plan within the week, and whether the plan functions as hoped if passed," said Tomoko Fujii, head of economics and strategy for Japan at Bank of America.
The greenback, amid volatile swings, has retreated against the euro in the past week or so since trouble in the US financial sector progressed from bad to worse, highlighted by last week's collapse of Lehman Brothers and the $85 billion rescue of American International Group Inc. The financial crisis, stemming from the subprime debacle, has been dubbed America's worst since the Great Depression with still-standing Wall Street investment banks Morgan Stanley and Goldman Sachs receiving approval this week to become commercial banks.
The US government's proposed rescue plan has failed to stem the dollar's slide, as uncertainty due to the plan's lack of details has fanned doubts about its effectiveness. The euro advanced 0.1 percent to $1.4658 after a low of $1.4636. The dollar rose 0.3 percent to 105.90 yen after dropping to around 105.35 yen earlier in the day.
The Goldman news sent S&P futures jumping as much as 23 points, and dragged the yen lower, stemming some of the inflow that the Japanese currency had enjoyed the previous day when US stocks slumped on fear that congressional wrangling could delay the plan to rescue the financial sector.
Asian equity markets were jittery but erased much of their earlier losses, giving a boost to the dollar against the yen in the late afternoon trade. The Nikkei stock average ended up 0.2 percent, recovering from an earlier 1.5 percent drop. "As it will take more time for the bailout plan to be enacted, the chances for the dollar and US stocks to fall will increase," said a sales trader at a Japanese trust bank in a note to clients. The euro gained 0.4 percent to 155.29 yen.