Dollar mixed against major currencies

Corning plans for 'the worst'

More Videos

OPEC shouldn't cut production

More Videos

NEW YORK (CNNMoney.com) -- The U.S. dollar was mixed against major currencies Wednesday, as stocks clung to gains following reports of a $14 billion deal struck to save the U.S. auto industry.

The euro gained against the dollar, rising to $1.3018 from $1.2931 late Tuesday in New York.

Britain's pound was little changed against the greenback, but edged up to $1.4793 from $1.4783 Tuesday.

The Japanese yen weakened against the dollar, falling to ¥92.84 from ¥92.03 Tuesday.

Stocks ended higher Wednesday afternoon, and the tight inverse correlation in recent weeks between the dollar and equity markets remains a dominant force, according to Steve Malyon, currency strategist at Scotia Capital.

The gains in the stock market are likely to put pressure on the dollar as investors venture beyond the safe haven currency, according to Malyon.

"When we have a reasonably positive day in the equity market, people are more willing to buy non-yen and non-dollar currencies," he said.

Investors fleeing risk in the stock market often purchase Treasurys, which are denominated in dollars. As a result, the greenback often rallies when the broader stock market retreats. Conversely, the buck often loses ground against the higher yielding euro and pound when the stock market's appetite for risk is more robust.

The White House and leading congressional Democrats reached an agreement on legislation to provide a $14 billion stopgap bailout to U.S. automakers, according to officials from the administration and Congress. The next steps were not clear Wednesday afternoon, but a House vote could take place later in the day.

Also Wednesday, the Treasury reported that federal budget deficit totaled $401.6 billion in just the first two months of the fiscal year, October and November, compared with $455 billion for all of fiscal 2008.

The dollar has gained nearly 9% against the euro and roughly 17% against the pound since the failure of Lehman Brothers in mid-September.

In contrast, the dollar has fallen nearly 13% against the yen during the same period.

Analysts say investors have been borrowing yen over the past 10 years in order to buy other assets, often in the United States, that have provided a higher return. As those assets, which include real estate, have fallen in value, investors have had to pay back the money to Japan, pushing up the value of its currency.