Investing.com - The U.S. dollar traded higher against most of its major counterparts Wednesday, as investors fled to the safety of the greenback after reports of the European Union delaying the Greek bailout.
During U.S. afternoon trade, the dollar was up against the euro, with EUR/USD shedding 0.49% to hit 1.3069.
In euro positive news, the head of China’s central bank stated that he believes the euro zone debt crisis can be solved. He vowed to become more involved via facilities like the European Financial Stability Facility.
However, euro zone finance ministers cancelled a meeting with Greece officials today to sign off on the second Greek bailout package, after failing to obtain assurances from Athens that the austerity measures will be implemented.
Ministers are expected to hold a teleconference ahead of the official meeting rescheduled for Monday.
Also Wednesday, official data showed that the euro zone’s gross domestic product shrank by a seasonally adjusted 0.3% during the fourth quarter and grew by just 0 .7% during 2011 as a whole.
The greenback was fractionally lower against the pound, with GBP/USD easing higher by 0.04% to hit 1.5701.
The Bank of England’s February inflation report dampened expectations for further quantitative easing earlier after the bank raised its inflation forecast for two years time to a higher-than-expected 1.8% up from 1.3% in November's report.
But the pound remained under pressure after BoE Governor Mervyn King said that economic growth is likely to alternate between expansion and contraction in 2012 and warned that the euro zone crisis remains the biggest threat to the U.K. economic recovery.
In other U.K. news,, a report showed that the number of people claiming unemployment benefits rose more-than-expected in January, while the unemployment rate held steady at 8.4%, the highest level since 1996.
The greenback was lower against yen, with USD/JPY slipping 0.21% to trade at 78.28.
The yen slumped to a three month low against the greenback during the Asian session after the Bank of Japan unexpectedly announced that it would increase the size of its asset-purchase program by JPY10 trillion in an attempt to boost growth and protect the economy from the effects of the strong yen.
The greenback was higher against the Swiss franc with USD/CHF rising 0.45% to hit 0.9236.
In Switzerland, a report showed that economic sentiment improved in February, rising significantly for the second consecutive month.
Elsewhere, the greenback remained lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD slipping 0.06% to hit 0.9986,AUD/USD up 0.17% to hit 1.0712 and NZD/USD rising 0.23% to hit 0.8358.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.19% to hit 79.71.
In the U.S., a report showed that manufacturing in the New York region expanded at the fastest rate since June 2010 in February.
A separate report showed that industrial production in the U.S. was unexpectedly flat in January.
Investor's are awaiting the Federal Reserve's minutes of its most recent policy-setting meeting.