NEW YORK (AFP) - The dollar rebounded from recent depths against the euro while the yen held firm as oil prices fell sharply on news of stronger-than-expected data on US crude reserves.
The single European currency dipped to 1.2706 dollars in late European trading against 1.2768 late on Tuesday in New York.
The euro had scaled an eight-month summit of 1.2842 dollars overnight Tuesday before the greenback clawed its way back.
The dollar was changing hands at 106.37 yen from 106.70 on Tuesday.
The US currency chalked up strong gains against the euro, the pound and the Swiss franc after a sharp drop in oil prices as news of a rise in US crude oil stockpiles calmed market fears of a supply crunch during the northern hemisphere winter.
New York's benchmark contract, light sweet crude for delivery in December, plunged 2.71 dollars, or 4.9 percent, to close at 52.46 dollars a barrel, a three-week low.
Brent North Sea crude for December slumped 2.11 dollars, or 1.4 percent, to close at 49.45 dollars.
In the last set of inventories before the presidential elections, the US Department of Energy reported that crude supplies rose by four million barrels to 283.4 million. The build-up should leave US refiners in a better position to cope with the winter demands on heating oil, analysts said.
Some analysts say the market remains bearish on the greenback despite the modest improvement.
"There has been mounting concern recently about the dollar's slump, as oil prices, election jitters and disappointing data have all weighed on the greenback," said Charmaine Buskas, an analyst with research firm Economy.com.
Earlier Wednesday, weaker-than-expected US durable goods orders had pushed the dollar slightly lower, but failed to have much lasting impact.
US durable goods orders in September climbed by just 0.2 percent following August's 0.6 percent decline, markedly lower than the 0.5 percent predicted by analysts.
"The data is important but the market has got bigger issues on its mind at the moment, and interest rate differentials are being put on the backburner," said Bank of New York currency analyst Neil Mellor.
Concerns remain over the huge US current account and budget deficits, as well as questions over just how much appetite the US Federal Reserve will have for more interest rate hikes.
Elsewhere, the yen also received a boost from the lower oil prices, remaining steady against the dollar but rising sharply against the euro and the pound. With Japan a 100 percent net importer of oil, the yen is seen as sensitive to movements in the oil price.
In late New York trade, the dollar stood at 1.2070 Swiss francs from 1.2011 Tuesday.
The pound was at 1.8276 dollars from 1.8346 Tuesday.
10/27/2004 - 21:57 GMT - AFP