Dollar gains on stimulus deal

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NEW YORK (CNNMoney.com) -- The dollar gained against the euro and the pound Wednesday as traders mulled the impact of the newly-brokered $789 billion economic stimulus bill.

The euro fell to $1.2882, down from $1.2913 late Tuesday.

And the dollar rose against the British pound on Wednesday, to $1.4367 from $1.4542 late Tuesday, following a government report that showed U.K. unemployment at a 10-year high.

The greenback fell against the yen to ¥90.3 from ¥90.47 late Tuesday.

Stocks churned Wednesday, a day after investors shunned Treasury Secretary Tim Geithner's new bank rescue plan and on the news that the House and the Senate agreed on a final economic stimulus deal.

If the stimulus works to shore up the ailing economy, that could give the greenback an advantage - not immediately - but within a month or two, according to John Kicklighter, a currency strategist with DailyFX in New York.

"The stimulus will, in about a month's time, work its way into the market and help the dollar over the longterm. If the stimulus puts the dollar as one of the first economies to recover from the recession, it'll be ahead of the eurozone, Japan and the UK. That means the dollar will be in a better fundamental position, and speculators will consider this," Kicklighter said.

Investors have placed bets for many months on U.S. economic rescue efforts leading a global economic recovery.

In the meantime, Kicklighter expects the dollar to remain the world's safe haven currency, edging out the yen. Japan is preparing next week for a steep forecasted decline in GDP for the quarter ending Dec. 31, according to Kicklighter.

"Investors are really focusing on the U.S. because if you're a global investor and you need safety, you need Treasurys with their government backing," Kicklighter said.

"In a world where everything is going down, you look for the person least on fire, and that's the U.S.," he added.

For the most part, the dollar has been in an upward trend against the euro and pound since the summer, though it has fallen against the yen during that period.

Kicklighter expects a gloomy outlook for the pound, based on grim news from its labor market.

The United Kingdom's National Statistics Office reported that British unemployment rose to 6.3% from 6.1% in December. The economy shed 146,000 jobs in the fourth quarter of 2008, leaving nearly 2 million out of work in the country.

CNNMoney.com staff writer David Goldman contributed to this report.