* Uncertainty on US corporate outlook supports dollar, yen
* Euro, sterling dip as investors remain cautious
* Weak GE, Bank of America earnings boost dollar
(Updates prices, adds comment, details)
By Steven C. Johnson
NEW YORK, July 17 (Reuters) - The dollar firmed on Friday
after a mixed batch of U.S. corporate earnings raised some
concern about the economy and enhanced the dollar's safe-haven
appeal at the expense of higher-yielding currencies.
U.S. data showing construction of new homes rose in June
helped ease some of that anxiety, capping dollar gains.
But the overall mood was one of caution, traders said. News
that General Electric <GE.N> profits fell by almost half in the
second quarter added to market worries. Bank of America <BAC.N>
also reported a lower quarterly profit.
"There's still an underlying tone of risk aversion looming.
People don't feel comfortable with the economy," said Melvin
Harris, strategist at Advanced Currency Markets in New York.
"Earnings today were not stellar while housing starts data
was good but is a volatile indicator that changes from month to
month," he said,
The uncertainty had investors wary of perceived higher-risk
currencies such as the euro and Australian dollar. Steven
Butler, head of FX trading at Toronto-based Scotia Capital,
said the euro's failure to extend gains much above $1.41
underscored the anxiety.
"It still feels like we're one bad number away from things
turning negative again," he said.
The euro was down 0.3 percent at $1.4105 <EUR=> after
rising to $1.4144 earlier. It fell 0.1 percent to 132.65 yen
<EURJPY=>. The dollar rose 0.3 percent to 94.06 yen <JPY=>.
An index that measures the dollar against a major currency
basket rose 0.3 percent <.DXY> after falling to a six-week low
Thursday. Sterling fell 0.6 percent to $1.6338 <GBP=D4>.
Bomb blasts at hotels in Indonesia also dampened risk
sentiment, though most analysts said the effect was limited.
STUCK IN RANGES
The market cheered stellar earnings from Goldman Sachs
<GS.N> and JPMorgan Chase <JPM.N> earlier this week as well as
big corporations such as Intel <INTC.O>, but investors were
reluctant to get too optimistic.
Markets shrugged off euro zone trade data, which showed a
surplus of 1.9 billion euros in May, and comments from Japan's
top financial diplomat about the dollar remaining a core asset
in Japan's $1 trillion foreign currency reserves.
Rintaro Tamaki, Japan's vice finance minister for
international affairs, also said he would not rule out Japanese
intervention but added that foreign exchange rates should be
determined by the market. []
Greg Salvaggio, vice president for trading at Tempus
Consulting in Washington, said low risk tolerance was keeping
traders on short leashes and currencies in narrow ranges.
Those ranges may hold, he added, until the Federal Reserve
details its strategy for raising interest rates from near zero
and withdrawing some of the trillions of dollars it's spent to
support the U.S. economy during the crisis.
"This has been a difficult market for forex traders," he
said.
Fed Chairman Ben Bernanke will deliver his seminannual
monetary policy testimony to the U.S. House Financial Services
Committee next week.
(Additional reporting by Vivianne Rodrigues in New York and
Jessica Mortimer in London; Editing by Chizu Nomiyama)
