The dollar steadied on Tuesday after losses in the previous sessions, as traders remained uncertain about the outlook for the global economy.
While Chinese GDP figures signaled a soft landing for the world’s fastest growing economy, warnings about the European sovereign debt crisis continued to give the safe haven dollar a measure of support.
In economic news from the U.S., New York manufacturing activity has continued to expand in the month of January, according to a report released by the Federal Reserve.
The New York Fed said its general business conditions index climbed to 13.5 in January from a revised 8.2 in December, with a positive reading indicating growth in manufacturing activity. Economists had expected the index to edge up to 10.5.
The dollar was stable near $1.2731 versus the euro, about a penny from last week’s 17-month high of $1.2623.
Early gains helped to dollar to Y77.90 versus the yen, a modest improvement from a 3-month low of Y76.54 touched overnight.
There was little reaction to the latest interest rate announcement from the Bank of Canada, leaving the dollar less than two cents above par versus its Canadian counterpart.
The Bank of Canada made no change to its monetary policy on Monday, keeping the benchmark rate at one percent despite headwinds from Europe and sluggish U.S. growth.
“The outlook for the global economy has deteriorated and uncertainty has increased” in the past few months, a statement from the Bank read.
Meanwhile, the Chinese economy expanded at the slowest pace in more than two years in the fourth quarter of 2011 as a result of sluggish external demand and Beijing’s past policy tightening to contain inflation and property prices.
Data from the National Bureau of Statistics showed Tuesday that the gross domestic product grew 8.9 percent year-on-year in the fourth quarter, the weakest pace since the second quarter of 2009.
German economic confidence improved at the sharpest pace on record in January, suggesting that economic activity is likely to stabilize within the next six months instead of deteriorating further.
The economic sentiment index that forecast economic developments over coming six months, rose by 32.2 points to -21.6 points in January, the highest level since July 2011, according to a survey released by the Mannheim based Centre for European Economic Research (ZEW).