NEW YORK: The US dollar recovered against a basket of major currencies on Wednesday, a day after posting its worst one-day loss in over a year, as a lack of progress on a Greek debt deal hurt the euro and as belief in the dollar's longer-term strength returned.
With the lack of movement on Greece's plans to secure a new debt agreement, traders stepped in to buy the dollar on the view that Tuesday's greenback selloff had gone too far.
"When you have the selloff like we did yesterday, as soon as it's complete, then people want to buy the dip," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. He said markets were skeptical that "any real progress" had been made on Greece.
While recent weakness in U.S. economic data contributed to the dollar's drop on Tuesday, analysts said focus has turned to Friday's U.S. nonfarm payrolls report for January, which economists expect will show an increase of 234,000 jobs, according to a Reuters poll.
Analysts also said the path toward tighter monetary policy in the United States and decisively looser policies in Europe and Japan continued to underpin the dollar.
The Australian dollar erased recent gains against the greenback and last traded down 0.32 percent at $0.7765. The currency had gained after China announced a cut in banks' required cash reserves, but diminished risk appetite led traders to again favor the dollar.
"The mood again is really quiet and a little bit reserved, and that's one reason why you're seeing the Aussie down," said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities in New York.
He said the Reserve Bank of Australia's recent rate cut, which pushed the currency to a nearly six-year low on Tuesday, would continue to weigh on the Australian dollar.
The euro was last down 0.48 percent against the greenback at $1.14210. The dollar was up 0.3 percent against the Swiss franc at 0.92630 franc. The dollar was down slightly against the Japanese yen at 117.48 yen.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.39 percent at 93.962 after dropping nearly 1 percent Tuesday.
On Wall Street, the benchmark S&P 500 stock index was last down 0.41 percent.
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