Dollar Edges Lower Against Euro as Oil Rebounds

The U.S. dollar edged lower against the euro on Wednesday after a spike in crude oil prices rekindled worries about the world's largest economy's growth outlook.

Dollar and Euro
Dollar and Euro

But the greenback erased earlier losses and rose against the yen amid growing fears that high energy prices could hurt the Japanese economy further. The yen also slipped against the euro.

"Commodities are tight today, that adversely affects the Japanese economy," said Firas Askari, head currency trader at BMO Capital in Toronto. "I would expect to see a bit of yen sell-off. It's not good for the U.S. dollar either against everything else except the yen."

Oil prices rose more than $4 per barrel on Wednesday after government inventory data showed crude inventories and refined product supplies fell last week.

Crude futures settled up 2.69 percent at $116 a barrel.

In afternoon trading in New York, the euro traded 0.2 percent higher at $1.4935, Against the Japanese yen, the euro rose 0.5 percent to 163.68 yen.

Meanwhile, the dollar index was little changed at 76.199. The dollar was up 0.2 percent against the yen at 109.41 yen .

In the United States, the Commerce Department said retail sales fell 0.1 percent in July, in line with Wall Street estimates. Meanwhile, another report showed U.S. import prices climbed a bigger-than-expected 1.7 percent in July.

Fears about the health of the global economy were fanned by data that showed Japan's economy shrank 0.6 percent in the second quarter.

Second-quarter data for German gross domestic product on Thursday are expected to show contraction in the euro zone's biggest economy.