Investing.com - The dollar rose against against the other major currencies on Wednesday, but gains were expected to remain limited as ongoing concerns over the global economic outlook persisted.
USD/JPY climbed 0.53% to trade at 119.97, after rising to highs of 120.46 earlier.
The dollar gained ground higher after the Nikkei rose in early trade, dampening demand for the Japanese currency.
But the Nikkei ended slightly lower and Chinese shares were also lower after a volatile session after Tuesday’s run of disappointing manufacturing data added to fears over the global economic outlook.
Economic reports showed that China’s factory sector contracted at the fastest rate in three years, while manufacturing activity in Europe and the U.S. was also weaker than expected.
The dollar was also higher against the euro, with EUR/USD down 0.46% at 1.1265.
The worsening outlook for equities has underpinned demand for the low yielding euro and yen in recent sessions.
Investors often use low-yielding currencies to fund positions in higher-yielding currencies and equities, known as carry trading.
The dollar has also come under pressure amid ongoing uncertainty over whether the recent turmoil in global financial markets will prompt the Federal Reserve to delay hiking short-term interest rates.
Investors were looking ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
The dollar was higher against the pound and the Swiss franc, with GBP/USD down 0.17% at 1.5277 and with USD/CHF advancing 0.66% to 0.9645.
Data earlier showed that the Markit construction purchasing managers' index ticked up to 57.3 in August from 57.1 in July. Economists had expected the index to improve to 57.5.
The Australian dollar was lower, with AUD/USD retreating 0.40% to 0.6987, while NZD/USD held steady at 0.6328.
The Australian Bureau of Statistics reported on Wednesday that the country's gross domestic product rose 0.2% in the three months to June, compared to expectations for a 0.4% growth rate. Australia's economy expanded by 0.9% in the first quarter.
On a yearly basis, Australia's GDP increased by 2.0% in the second quarter, disappointing expectations for a 2.2% gain.
Meanwhile, USD/CAD was little changed at 1.3263.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.32% at 95.70, still holding above the eight-month trough of 92.52 hit last Monday.