By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The dollar was modestly higher versus most major rivals Wednesday, gaining ground on the euro on jitters over Greek politics.
The dollar index DXY +0.20% , which measures the U.S. unit against a basket of six major currencies, rose to 76.022 from 75.915 late Tuesday.
The euro EURUSD -0.2624% slipped to $1.4071 from $1.4102 in late North American trading Tuesday. See real-time currency quotes and tools.
DXY 76.04, +0.15, +0.20%
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The euro had risen Tuesday, but its gains unraveled as investors kept watch on the sovereign-debt situation in Europe — particularly Greece, on market speculation over the potential for an early election.
A Greek government official denied such a plan was in the offing, Dow Jones Newswires reported, but declined to comment on Greek media reports that the government may offer a referendum on its latest round of austerity measures.
While Greek Prime Minister George Papandreou appears not to be ruling out a referendum, "it’s hard to see a referendum passing if it’s put to the people,” said Chris Walker, currency strategist at UBS.
“If it does happen, it would be a crucial moment for Greece and the euro as the people will decide on the country’s fate,” he said in a research note. “It will give Papandreou the mandate to take drastic action in either direction: extreme austerity or default.”
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The British pound GBPUSD +0.2163% traded at $1.6172, down slightly from $1.6177.
Britain’s Office for National Statistics said Wednesday that first-quarter gross domestic product expanded by an unrevised 0.5%, offsetting an identical decline in the final three months of 2010.
The breakdown of the data showed household consumption fell 0.6%, while capital spending showed a 4.4% decline.
Michael Derks, chief strategist at FxPro, said the misery in the private sector comes as private spending has collapsed by 7.3% over the past three years, making it little wonder the Bank of England’s Monetary Policy Committee “is masticating so intensely on the issue of hiking rates.”
The Australian dollar AUDUSD -0.6160% bought $1.0501, slipping from $1.0545.
Against the Japanese yen, the dollar USDYEN +0.1098% bought ¥82.02, up marginally from ¥81.90 late Tuesday.
Currency markets shrugged off news that Japan’s trade balance swung to a deficit in April due to the March 11 earthquake, though the drop in exports was less than expected. Read more on Japan trade deficit.
William L. Watts is a reporter for MarketWatch in London.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
