Dollar gains against euro ahead of ECB meeting

Torsakarin | iStock / 360 | Getty Images

The U.S. dollar rose against the euro on Wednesday on fears that comments from the European Central Bank on Thursday could hurt the European currency, while some riskier commodity currencies remained near multi-month highs on gains in oil prices and reduced worries over the global economy.

The euro eased from a one-week high against the dollar of $1.1386 touched earlier in the session and was last down 0.49 percent at $1.1297 ahead of the ECB meeting.

Analysts said that, while expectations were low that the ECB would announce further easing, the potential for dovish remarks from ECB President Mario Draghi to hurt the euro led traders to sell the currency.

Investors "don't want to hold too big of a position in euros ahead of tomorrow," said Dean Popplewell, chief currency strategist at Oanda in Toronto.

Last month the ECB unleashed a volley of interest rate cuts, additional monthly bond purchases and more cheap loans to banks.

The Australian dollar eased slightly from a 10-month high of $0.7830 hit earlier in the session, but last hovered near that level at $0.7796. The Canadian dollar hit a 9-1/2-month high against the greenback of C$1.2590.

Analysts said those commodity currencies benefited from a rebound in oil prices and growing reassurance about China's economic situation following strong data from the world's second-biggest economy in recent weeks.

The dollar hit a two-week high against the safe-haven yen of 109.88 yen. The dollar also rallied more than 1 percent against the Swiss franc, another currency often viewed as a safe haven, to a more than three-week high of 0.9733 franc.

"You have concerns about China much lower than they were," said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York.

Jalinoos also said higher U.S. government bond yields, compared to European and Japanese yields, contributed to the dollar's gains against the yen and euro. Benchmark 10-year U.S. Treasury yields hit a three-week high of 1.859 percent.

The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.57 percent at 94.509.

Underscoring the greater risk appetite, the benchmark U.S. S&P 500 stock index was last up 0.32 percent.