By Don Curren
OF DOW JONES NEWSWIRES
TORONTO (Dow Jones)--The dollar is higher against its key rivals late Tuesday morning, recovering from earlier losses against the euro after slumping stocks and diminished appetite for risk pushed that currency lower.
The dollar's scramble higher against the yen, driven in part by higher U.S. yields, took it to Y93.02--its highest level since Jan. 8, according to EBS via CQG.
The British pound was the only major currency to maintain its gains against the greenback. It rallied in earlier trading after news that fourth-quarter gross domestic product growth was revised to 0.4% from 0.3%.
Late Tuesday morning, the euro was at $1.3416 from $1.3475 late Monday, according to EBS via CQG. The common currency was at Y124.55 from Y124.65. The dollar was at Y92.83 from Y92.49 and CHF1.0669 from CHF1.0625. The pound was at $1.5090 from $1.4981.
The ICE U.S. Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was 81.479 from 81.286.
Month- and quarter-end related flows contributed to volatile trading Tuesday. Other factors weighing on the euro in morning trading were news that the International Monetary Fund cut its growth forecasts for Germany and warned there are "substantial downside risks" caused by in part by weakness in the banking sector because of exposure to southern Europe.
The euro's failure to break above the $1.3535-40 area also contributed to that currency's retreat, and the subsequent move below $1.3540-50 encouraged those with short-term bets on the euro to abandon them, said Brian Dolan chief currency strategist at Forex.com in Bedminster, New Jersey.
The euro was also buffeted by cross trading against the yen and the pound, market watchers said.
"There's been a little cross activity going through that's weighing on the euro," said Steve Butler, director of foreign exchange at Scotia Capital. "Euro/sterling's been a big factor today that's been weighing on the euro."
The euro had already relinquished earlier gains against the dollar after Greek bonds came under selling pressure, bringing the focus of the market back to the fiscal issues facing Greece.
A move higher in U.S. yields was a key driver for the greenback's gains against the Japanese currency, analysts said. Yield differentials are a primary driver of movements in the dollar/yen pair.
"We're still up just shy of 3.90% in the 10-year," said Forex.com's Dolan. News that the Conference Board's consumer confidence index for March was at 52.5 from the previous month's upwardly revised 46.4 also pushed the dollar higher in morning trading, said Omer Esiner, senior currency market analyst at Travelex Global Business Payments in Washington.
"All of the subcomponents of the report improved markedly, pushing the headline reading of morale to its highest level since May 2009," he said.
Commodity-linked currencies had advanced against the dollar in earlier trading, but surrendered most of their gains as investors retreated from risk in late-morning trading.