Forex - Aussie rebounds on stronger Q1 GDP, eyes ahead on Greece

Investing.com - The Aussie rebounded Wednesday on stronger than expected gross domestic product growth in the first quarter as investors continued to eye developments in the Greece debt crisis.

AUD/USD rose 0.48% to 0.7810, while EUR/USD rose 0.14% to 1.1169. USD/JPY changed hands at 123.95, down 0.14% after comments from abank of Japan board member, Sayuri Shirai, suggested the current pace of government bond buying will remain in place.

First quarter GDP in Australia rose 0.9%, above the gain of 0.7% expected quarter-on-quarter and for an annual pace of 2.3%. The faster than expected growth pace will challenge assumptions on the scope for further rate cuts in the near term.

Earlier in Australia, the AIG services index eased to 49.6 in May from 49.7.

The HSBC China services PMI for May came in at 53.5, stronger than the 53.3 seen.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.07% at 96.07.

Overnight, the dollar tumbled over 1% against the U.S. dollar index, after data showing U.S. factory orders fell for the sixth straight month in April sparked concerns over strength of the economy.

The dollar weakened after the Commerce Department said factory orders fell 0.4% in April, confounding expectations for a 0.2% increase. March’s figure was revised to 2.2% from a previously reported 2.1%.

On a year-over-year basis, factory orders dropped 6.4%, the sixth straight monthly decline.

The unexpectedly weak data sparked fresh fears over the outlook for second quarter growth after data last month showed that the U.S. economy contracted 0.2% in the first quarter.

The dollar had gained ground on Monday as upbeat U.S. economic reports, including on manufacturing activity and construction spending, fuelled optimism that the economy was regaining momentum after a weak first quarter.

Euro gains were held in check however after Greek Prime Minister Alexis Tsipras said Tuesday that his government submitted a "comprehensive proposal" to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.

Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.