* Dollar turns lower vs euro after trading up most session
* Currencies track Wall Street stocks
* Morgan Stanley incurs loss; Wells Fargo credit losses up
* Bank of England to keep asset-buying level
(Recasts, updates prices, adds quotes)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 22 (Reuters) - The dollar edged lower in
choppy trading on Wednesday as a mix of encouraging remarks on
the U.S. economy by the Federal Reserve chief, stronger house
prices and technical factors more than offset weak bank
earnings.
Although Fed Chairman Ben Bernanke delivered precisely the
same remarks before the U.S. Senate Banking Committee as he had
to the U.S. House Financial Services Committee on Tuesday, on
Wednesday said he is seeing some positive signs in the housing
market. His comments seemed in line with data showing U.S. home
prices were up 0.9 percent in May from the previous month. For
more see []. This helped increase risk appetite,
boosting currencies viewed as higher risk such as the euro.
"Even though Bernanke repeated the same remarks he made on
Tuesday, markets are encouraged by his comments today that the
recovery is gaining steam," said Kathy Lien, director of FX
research at GFT in New York.
"We also had a strong housing report. All these have helped
push the dollar lower."
Technical factors were also a major driver, with traders
saying a big buy order of euros versus the yen helped push the
euro zone single currency higher against the dollar.
In addition, analysts said the 9,000 figure in the Dow
Jones industrial average <> is a huge level and traders are
aiming to take stocks higher and take that key figure out.
Around noon (1600 GMT) the Dow was up 0.23 percent at
8936.20.
In midday New York trading, the ICE Futures' dollar index
<.DXY>, a measure of the greenback's value against six other
major currencies, fell 0.3 percent on the day to 78.696.
The euro was up slightly versus the dollar at $1.4218
<EUR=> and was little changed against the yen at 133.28
<EURJPY=R>.
The dollar edged up against the Japanese currency to 93.76
yen <JPY=>.
Earlier in the session, financial sector optimism was
dampened after weak Morgan Stanley <MS.N> results and higher
credit losses at Wells Fargo <WFC.N>.
Morgan Stanley's earnings report, which showed the bank
posting a second-quarter loss of $1.10 per share, kicked off
earlier dollar buying in New York trading. See []
Wells Fargo quarterly profit increased 47 percent but its
report showed a surge in bad loans, fueling a view that the
fourth-largest U.S. bank still needs more capital to cover loan
losses. []
Wall Street trading was volatile, making it difficult for
currencies to make headway in either direction.
"Overall, the FX-equity link is still pretty tight," said
Vassili Serebriakov, senior currency strategist at Wells Fargo
in New York.
Even though equities have fluctuated, Serebriakov believes
that risk appetite remained subdued and investors in general
"are less optimistic."
In other currencies, sterling pared losses after minutes
from the Bank of England's latest policy meeting showed a
unanimous decision to maintain the bank's 125 billion pound
asset-buying total and keep interest rates at 0.5 percent.
The market took this as a signal that UK quantitative
easing could be at or near an end, suggesting the economy may
be starting to recover. But the pound was still 0.1 percent
weaker at $1.6429 <GBP=>.
Among higher-risk currencies, the New Zealand dollar rose,
0.4 percent at US$0.6580 <NZD=> while the Australian dollar
came off lows to trade 0.2 percent down at US$0.8170 <AUD=>.
(Editing by James Dalgleish)
