NEW YORK: The dollar made ground against the euro on Wednesday, as investors approached a crunch Spanish bond auction with trepidation.
"Caution returned to the market," said analysts at Travelex.
"Investors remain wary about European debt on the eve of a key Spanish auction of long-term bonds"
In foreign exchange trade, the euro dropped to $1.3120 from $1.3125 in New York late Tuesday and the dollar rose to 81.23 yen from 80.88 yen.
On Thursday Spain will hold an auction for 10-year debt, seen as a key test of market confidence in the country's ability to manage its fiscal crisis.
Markets have traded up the yields on Spanish debt above a high 6 percent earlier this week as fears rose that the country will seek a bailout.
The pound rose to $1.6020 from $1.5933.
"Defying an otherwise firmer greenback, sterling jumped broadly to 19-month highs overall and to two-week peaks against its US peer after the minutes to the Bank of England's April meeting showed renewed concern over inflation," said Travelex.
That "caused investors to scale back expectations for more growth-spurring quantitative easing" in Britain.
The dollar rose to 0.9157 Swiss francs, up slightly from 0.9152.
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