The dollar eased late morning after a weak Wall Street overnight and with uncertainty over the outlook for the US economy holding back the currency, despite recent increased financial-market stability, dealers said.
Semiconductor equipment companies in North America posted a book-to-bill ratio of 1.16 in July, down from 1.26 in June, as bookings declined to $1.153 billion from 1.171 billion a month earlier, data showed this morning.
"The July bookings data likely reflects renewed questions about the robustness of the economic recovery and the prospects for the consumption of electronic goods," said Dan Tracy, director at the Semiconductor Equipment and Materials International.
Minori Takeuchi, forex analyst at the Tokyo branch of JP Morgan Chase, noted investors have stopped panicking over the US system but the economy still seems too feeble to push equities up much further.
"It's not enough to push the stockmarket higher. I think the forex market sees risks on both sides. I don't know how long confidence in the US will last," she said, noting the importance of the Fed's shift to a weakening bias.
"Only consumers are enjoying (lower rates) but at least the Fed is ready to move," she said, adding that Europe and Japan will not escape a US downturn. "Still the US is stronger than European countries. If the US economy is weaker than expected, it will effect Japan and Europe."
Takeuchi also noted the risk to the European economies from major flooding after Germany scrapped plans to cut taxes to finance flood relief.
"This can be a fiscal stimulus but at the same time factories will not be operating. It will be disruptive for production," she said.
Meanwhile, Japan may face fears over its financial system ahead of the fiscal-half book closing, she added, noting the exagerated market response to Standard & Poor's warning of sovereign-downgrade risks.
"What S&P said is nothing and they are two notches behind Moody's so the fact that people noticed it and acted on it is important," Takeuchi said.
"I think by the end of September we may see some repatriation ... but at the same time we may see Nikkei selling by Japanese banks because they have to sell their cross-shareholdings."