Dollar Gains In Light Trading

The dollar edged up amid light trading volume on Wednesday as dealers prepared for a possible
rebound later in the week when U.S. economic data is released.

Trading was choppy during the New York session and driven mainly by automatic orders to buy dollars and sell other currencies.

Some liquidity will likely return to the market on Thursday when the final estimate of growth in third quarter U.S. gross domestic product will be released, as well as a report on mid-Atlantic business activity.

The euro was unable to break above the $1.3250 area, and that sparked selling that took it in back down to a session low of around $1.3160.

The euro remained up against the yen after hitting a fresh record high overnight at 156.39 yen, according to electronic trading platform EBS, while the dollar was

The yen has been under pressure against the euro and remained weak against the dollar after the Bank of Japan left interest rates unchanged at 0.25% earlier this week.

Signs of slower U.S. growth have investors betting the Federal Reserve's next move on interest rates will be a cut, though consensus on the timing of that move is harder to come by.

"The market will likely need to see weakness in the major December data released in early January before moving to rebuild expectations of a first-quarter rate cut," said Daniel Katzive, currency strategist at UBS in Stamford, Connecticut.

The U.S. currency was down about half a percent against both the Canadian and New Zealand dollars, with the latter hitting an 11-month peak at $0.6988 before easing back to around $0.6966 in recent trade.

Traders said the dollar's decline versus the Canadian dollar triggered stops below C$1.15 that sparked a further decline, while a rise in crude oil prices to a three-month peak above $64 also lent support to the commodity-sensitive currency.

Markets in Asia "breathed a collective sigh of relief," said Brown Brothers Harriman strategist Marc Chandler, after Thailand backtracked on tough new capital controls imposed earlier this week by exempting equities trades.

That sparked a recovery in the Thai bourse, but the Thai baht remained weak, with the dollar was up 0.6 percent at 36.080 baht.

Thailand's central bank said this week the capital controls were designed to contain a rapid rise in the Thai baht due to foreign currency inflows.