By Lisa Twaronite , MarketWatch
TOKYO (MarketWatch) — The dollar slipped against the euro Wednesday on continued hopes that a resolution to Greece’s debt woes and a new austerity plan could be near, but edged up against the yen amid a developing political crisis in Japan.
Australia’s dollar soared, after the country’s gross domestic product shrank less than expected in the first quarter of 2011.
The Australian dollar AUDUSD +0.6663% was buying $1.0737, up from $1.0661 in late North American trading on Tuesday.
Data from the Australian Bureau of Statistics showed the economy contracted by 1.2% in the first quarter of 2011, and grew by 1% on an annual basis to the end of March. Economists had been expecting a 1.4% contraction in the quarter and 0.7% growth for the year, according to Dow Jones Newswires. Read more on Australian GDP data.
The euro EURUSD +0.08% was buying $1.4427, up from $1.4377 Tuesday. See real-time currency quotes and tools.
European Union policy makers are “struggling to reach a consensus on an acceptable degree of ‘burden-sharing’ between the private and public sector — a necessary condition for additional financial support to Greece,” Frederik Ducrozet, economist at Credit Agricole, said in a note to clients.
Against the Japanese yen, the dollar USDYEN -0.1841% bought ¥81.41, up from ¥81.31 late Tuesday.
The Japanese currency could face pressure from a developing political crisis in Japan, should it spook foreign investors and lead them to sell their yen assets.
Japanese opposition parties will reportedly submit a no-confidence motion against Prime Minister Naoto Kan’s government on Wednesday, and the lower house could vote on it Thursday. Read more on Japan's Kan facing no-confidence motion.
“The likely resignation of the fiscal-consolidation-oriented Kan Cabinet could put a brake on Japan fiscal reconstruction and thereby negatively affect the [Japanese government bond] market, sending buyers back to waiting-and-seeing mode,” said RuiXue Xu, a rates strategist in Tokyo at RBS Securities Japan Ltd., in a note to clients Wednesday.
“But, on the other hand, the rise of yields will provide good opportunities for investors who are willing to buy on dips after the new month began,” Xu added.
Against the euro EURUSD +0.08% , the Japanese unit was ¥117.45, up from ¥116.92.
The British pound GBPUSD -0.2797% rose to $1.6487 from $1.6438 late Tuesday.
The dollar index DXY -0.10% , which measures the U.S. unit against a basket of six major currencies, slipped to 74.431 from 74.644 late Tuesday.
