LONDON, Oct 13 (AFP) - The dollar was off earlier session highs but still relatively firm Wednesday after currencies such as the Australian dollar and Canadian dollar faltered in the wake of a sharp retreat in commodity prices.
The single European currency fell to 1.2252 dollars in late European trading from 1.2325 late on Tuesday in New York.
The dollar climbed to 109.78 yen from 109.66 on Tuesday.
Of all the base metals, copper was hit the hardest on mounting concerns about demand growth in China.
The downward move in the commodity-bloc currencies prompted a readjustment across the currency markets that eventually saw the dollar hitting a three-week high against the euro.
The single currency, which was already on the backfoot after being unable to break through its recent range against the dollar after last week's disappointing US jobs report, slipped back to a low of 1.2228 dollars, its lowest level since September 22.
However, the euro recovered some ground in the afternoon as investors grew sceptical about whether the move lower in commodity prices could be sustained.
"No one is going to look at one or two days' moves (in commodity prices) and say that's the end of their inexorable move up," said Steve Barrow, currency strategist at Bear Stearns.
Dollar sentiment has improved in recent days after the euro failed to break above the 1.2450 dollar level, disappointing eurozone data was published, oil prices eased and the US Congress's approval of the Homeland Investment Act, which will lower taxes on US corporate profits earned abroad to 5.25 percent from 35 percent for 12 months.
"Against this background it is no surprise that the euro has failed to capitalise on the poor US jobs report at the end of last week," said CALYON's head of global currency research Mitul Kotecha.
Elsewhere, the pound was in the middle of its day's range against the dollar, after a strong British labour market report in the morning and a keynote speech by Bank of England governor Mervyn King late Tuesday.
Though King said there were signs the British economy was experiencing a "softer patch", he warned the drop in the pound and continued expansion of "total money spending, broad money and credit" may drive inflation higher, as well as pointing to a tightening labour market.
Steve Pearson, currency analyst at HBOS, said the speech was "an initial warning" to the markets that if economic data in Britain regains strength, the rate-setting Monetary Policy Committee may need to increase rates further.
The central bank has raised the cost of borrowing by a quarter point on five occasions, taking its key repo rate up to 4.75 percent.
The euro was changing hands at 1.2252 dollars from 1.2325 late on Tuesday in New York, 134.70 yen (135.23), 0.6856 pounds (0.6875) and 1.5454 Swiss francs (1.5472).
The dollar stood at 109.78 yen (109.66) and 1.2596 Swiss francs (1.2554).
The pound was at 1.7896 dollars (1.7920), 196.45 yen (196.70) and 2.2546 Swiss francs (2.2492).
On the London Bullion Market, the price of an ounce of gold stood at 411.25 dollars against 414.70 on Tuesday afternoon.