LONDON -- Rising equity markets and more gains for commodities are lifting global sentiment and driving the dollar lower across the board in Europe Wednesday.
By 1038 GMT, the dollar had fallen to 89.14 yen from 89.30 yen late Tuesday in New York, according to EBS. The euro was up at $1.4945 from $1.4869 as well as at 133.26yen from 132.84 yen.
European stock markets were higher as investors cheered a new record high for gold and fresh gains in crude oil and other commodities prices.
The pound was down at $1.6801 from $1.6813. At one stage, the pound fell sharply to $1.6766 as a split vote on quantitative easing and other details in the Bank of England's minutes indicated a fairly dovish assessment of the U.K. economy. The currency, however, bounced back soon after.
Sentiment in financial markets has been shifting back and forth for several days now, leaving most major currencies trading rather aimlessly. On Tuesday, the market was disappointed by U.S. producer price numbers as well as industrial production data for October. The former showed that prices rose by only 0.3% last month instead of the 0.6% the market expected. The latter showed a 0.1% increase, not the 0.3% rise that had been forecast.
Despite this knock back to economic recovery hopes, the Dow Jones Industrial Average still managed to close with a 0.3% gain. The mood in Asia wasn't so positive with the Nikkei falling 0.6% and currencies remaining in very narrow ranges. However, by the time European trading got underway, the rally in gold to a new record high and the fresh gains in crude oil and other commodity prices appeared to have lifted investor spirits. Stock markets posted gains of nearly 0.5% in places.
Whether this optimism will last could depend on U.S. consumer price and housing starts data due later in the day. Consumer prices are expected to have risen by 0.2% last month, largely unchanged from the rise seen in September. Housing starts are forecast to have risen 1.7% in October, accelerating from the 0.5% increase seen the month before.
