* 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
"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
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
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
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. [ID:nT324506]
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)