LONDON (AFP) — The dollar dipped against the euro on Wednesday amid concerns that a US financial sector rescue plan is becoming bogged down in political bickering, dealers said.
The European single currency rose to 1.4663 dollars from 1.4657 in New York late on Tuesday.
Against the Japanese currency, the dollar advanced to 106.11 yen from 105.49 yen.
US lawmakers were digging their heels in against the government's 700-billion-dollar financial rescue package, setting the scene for a fierce showdown on Capitol Hill watched anxiously by markets around the globe.
Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson were facing another day of testimony, after Tuesday's cold-shoulder reception by senators balking at a swift passage of the bailout.
"Despite the political wrangling, it is possible that the plan will pass by the end of this week or early next week," said Calyon analyst Stuart Bennett.
"A few more days of uncertainty is likely to weigh both on equity markets and the dollar," he added.
World financial markets were calmed somewhat after US tycoon Warren Buffett helped partly offset uncertainty surrounding the government rescue package.
Buffett's Berkshire Hathaway said it was investing five billion dollars (3.4 billion euros) in beleaguered US bank Goldman Sachs.
Meanwhile, the European Central Bank and Bank of England on Wednesday made an additional 80 billion dollars available to financial institutions on a short-term loan basis amid a global squeeze on credit.
Japan's central bank also injected an additional 1.5 trillion yen (14.2 billion dollars) into the Tokyo money market.
Euro gains against the dollar were capped Wednesday after downbeat news from Germany, which is the biggest economy in the eurozone.
German business confidence dropped for the fourth straight month in September, a key index showed, as the country's economy braced for fallout from the international financial crisis.
The monthly business climate index calculated by Munich-based economic research institute Ifo fell to 92.9 points in September from 94.8 points in the previous month.
"September's fall in the German Ifo index brings further evidence that economic activity is slowing sharply," said Jennifer McKeown, European economist at the Capital Economics consultancy in London.
In London morning trade Wednesday, the euro changed hands at 1.4663 dollars against 1.4657 late Tuesday, at 155.87 yen (154.64), 0.7902 pounds (0.7910) and 1.5966 Swiss francs (1.5907).
The dollar stood at 106.11 yen (105.49) and 1.0872 Swiss francs (1.0851).
The pound was at 1.8585 dollars (1.8527).
On the London Bullion Market, the price of gold fell to 889.63 dollars an ounce from 899 dollars late Tuesday.
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