Weak equity markets sustained an overall tone of risk aversion that is keeping the dollar and the yen bid against most major currencies Wednesday, although movements have generally been contained by the ranges established overnight.
The dollar was higher versus the euro but has been unable to extend its overnight rally to fresh two-week highs, while remaining near its weakest levels of the day and near a one-week low against the yen.
Late morning Wednesday, the euro was at $1.4773 from $1.4802 late Tuesday. The dollar was at ¥91.13 from ¥91.82, while the euro was at ¥134.62 from ¥135.88. The U.K. pound was at $1.6396 from $1.6389. The dollar was at 1.0225 Swiss francs from 1.0219 Swiss francs.
The Dollar Index, a trade-weighted basket of six currencies, was at 76.248 from 76.228 late Tuesday.
Wednesday's lack of any notable extension of the dollar's recent risk aversion-driven rebound has likely drawn on the absence of any major surprises in the day's economic data, even as the data have generally perpetuated recent misgivings about the progress of economic recovery and the eventual removal of monetary stimulus.
U.S. durable goods orders snapped back as expected from August's 2.6% decline, although the 1.0% increase registered in September was somewhat less than most had expected.
New-home sales data for the same month was considerably weaker than expected, however, and encouraged currency players to continue shying away from riskier currencies and other assets ahead of Thursday's key third-quarter gross domestic product report.
Against the expected increase in sales to 440,000 at an annual rate, single-family new home sales instead dropped 3.6% in September to 402,000.
"The housing numbers were not great, so that report didn't give the market any direction contrary to the prevailing trend of locking in some profits and taking risk off the table," said senior currency strategist Matthew Strauss of RBC Capital Markets.
Mr. Strauss added that while the housing report has played into the recent more guarded view toward the recovery process that also drew on Tuesday's soft U.S. consumer confidence report, "there is no real conviction in this rally in the U.S. dollar so far," which is more suggestive of a pause in the dollar's overall decline rather than a trend change.
Elsewhere, the impact on currencies from Norway's quarter-percentage point interest rate hike was also muted.
The Norges Bank became the first European central bank to raise rates with its decision to raise its key interest rate from 1.25% to 1.50%.
The move was well-anticipated, after soft Norwegian unemployment figures had doused earlier speculation about a more hawkish policy line by the Norges Bank.
"The Norges bank did not spring any real surprises," said Alan Ruskin, international strategist at RBS. Ruskin said the Norwegian krone remains "everyone's favorite trade," given the currency's solid underpinnings in terms of the economic outlook and Norway's solid fiscal position.
The Norwegian krone had come under heavy selling pressure in earlier European trading hours following the labor market data.
It rallied briefly in the wake of the Norges Bank hike, but then quickly fell back to earlier levels after the Bank cautioned that a stronger krone would slow its expected pace of rate increases.
