Forexpros – The U.S. dollar was mixed against its major counterparts on Wednesday, as investors looked ahead to the release of the minutes of the Federal Reserve’s most recent policy meeting, while concerns over the euro zone’s sovereign debt crisis remained.
During U.S. morning trade, the dollar was little changed against the euro, with EUR/USD easing down 0.01% to hit 1.2249.
Sentiment on the euro remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone’s bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures earlier in the day, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
But the greenback was down against the pound, with GBP/USD gaining 0.28% to hit 1.5563.
Sterling remained supported after data on Tuesday showed that manufacturing production rose by 1.2% in May, blowing past expectations for a more modest 0.1% gain, after falling by 0.8% in April.
A separate report showed that the U.K.’s goods trade deficit narrowed more-than-expected in May, as exports picked up from the previous month.
Elsewhere, the greenback was higher against the yen and little changed the Swiss franc, with USD/JPY adding 0.25% to hit 79.63 and USD/CHF edging down 0.03% to hit 0.9801.
Market participants looked forward to the outcome of Bank of Japan’s policy setting meeting on Thursday, amid speculation the central bank could increase its asset purchases.
Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.25% to hit 1.0201, AUD/USD rising 0.54% to hit 1.0246 and NZD/USD adding 0.44% to hit 0.7975.
In Canada, a government report showed that the nation’s trade deficit widened modestly to CAD0.8 billion in May from a deficit of CAD0.6 billion in April, as exports were relatively unchanged and imports increased 0.4%.
Meanwhile, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.05%, to trade at 83.52.
Data released earlier in the day showed that the U.S. trade deficit narrowed to USD48.7 billion in May from deficit of USD50.6 billion in April, as exports inched up 0.2% and imports fell 0.7%.
Market players now shifted their focus to the release of the minutes of the Federal Reserve’s most recent policy meeting later in the day, which could show whether the central bank is leaning toward more stimulus to boost growth.
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