The dollar continued posting gains against major world currencies in Asian trading on Wednesday, as earlier efforts to create a coalition government in Greece collapsed, opening the possibility for a new round of elections in June.
In Asian trading on Wednesday, EUR/USD was trading down 0.03% at 1.2726.
Talks among Greek political parties broke down in Europe earlier, with austerity serving as the chief hurdle.
Leftist parties have insisted austerity measures are hurting the country regardless of the bailout money they bring in, and want to scrap bailout terms that call for spending cuts and public-sector layoffs.
A interim Greek government will likely be appointed shortly, with new elections likely in early June, and markets are growing concerned politicians opposed to austerity will take the upper hand in new elections.
Rejection of austerity could mean an end to bailout money and Greece scrapping the euro.
The euro did see some bullish news, especially out of Germany.
Gross domestic product in Europe's largest economy grew by a seasonally adjusted 0.5% in the first quarter of 2012 from the previous quarter, above expectations for growth of 0.1%.
Year-on-year GDP growth came to 1.7%, outpacing expectations for 0.8% expansion.
The eurozone as a whole avoided a recession in the first quarter, with quarter-on-quarter GDP growth coming in flat, beating out expectations for a contraction of 0.2%.
The eurozone economy contracted by 0.3% in the fourth quarter of 2011.
In the U.S., retail sales crept up 0.1% in April, falling short of expectations for a 0.2% gain, posting its weakest growth in four months.
Meanwhile, headline U.S. consumer prices, including food and energy costs, came in flat in April.
Core consumer prices, which are stripped of volatile food and energy prices, rose 0.2% in April, in line with expectations,
A Federal Reserve Bank of New York manufacturing activity index for the New York area jumped to 17.1 in May from 6.6 in April, far outpacing market calls for an 8.5 reading.
Talk that the dollar is set to begin a steady climb against another safe-haven currency, the yen, further bolstered the greenback.
Meanwhile in the U.K., the country's March trade deficit remained unchanged at GBP8.6 billion, keeping cable steady.
The greenback was up against the pound, with GBP/USD down 0.12% and trading at 1.5975.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.07% at 81.49.
Later Wednesday, the U.S. will release official data on building permits and housing starts, followed by Federal Reserve data on the capacity utilization rate and industrial production.
Crude inventory data will publish as well the minutes of the Fed’s latest policy meeting.
Japanese gross domestic product growth figures are due out as well.(curtsey : forexpros)
Rupesh Yatesh Dalal
Head Research Department
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