The euro hit a fresh one-week low against the dollar on Wednesday as concerns over Greece's fiscal problems escalated, while the Australian dollar stayed buoyed on expectations of higher interest rates. The euro has been pressured in recent sessions following a media report Greece wanted to renegotiate a deal reached last month over joint EU-International Monetary Fund aid.
Greece denied the report but on Tuesday the yield spread between Greek and German government bonds exceeded 4 percentage points, the widest since the euro's launch. "Renewed uncertainty over Greece is hurting an already jittery euro," said Stuart Bennett, senior FX strategist at Credit Agricole. Worries over Greece's debts and those of other peripheral eurozone countries have knocked the single currency down almost 10 percent from its January high of $1.4582.
At 1145 GMT, the euro fell as low as $1.3337, down 0.4 percent on the day. Against the yen, the euro lost 0.4 percent to 125.08 after losing over 1.2 percent on Tuesday. The Aussie topped 87.50 yen after breaching its 200-week moving average at 87.06 yen but pulled back later after nearing resistance at 87.70, a 61.8 percent retracement of its fall in 2007 from above 107.80 to 55.11 in late 2008.
The yen was steady at 93.78 per dollar with rising short-term dollar rates and Treasury yields supporting the greenback. The Bank of Japan said after keeping its monetary policy unchanged that the economy was picking up further, but analysts say prolonged deflation is likely to keep the government pressing the bank for more monetary easing.
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