Dollar falls in Asia after brief rise on Japan PM resignation

The dollar fell in Asia against the yen Wednesday after rising temporarily on the surprise announcement that Japan's prime minister was stepping down.Prospects about political uncertainty in Japan briefly set off yen-selling, but the dollar started falling later, trading at 113.94 yen by midafternoon, down from 114.30 yen late Tuesday in New York.The euro hit a new all-time high against the U.S. dollar Wednesday, climbing to US$1.3878 amid speculation the U.S. Federal Reserve will soon cut interest rates. By early morning in Europe, the euro had settled back slightly to US$1.3867.

The previous high for the 13-nation euro was US$1.3852, hit in July.

Traders said the dollar's direction was still undecided amid downward pressure from expectations the Fed will cut interest rates to bolster the U.S. economy.

The announcement by Japanese Prime Minister Shinzo Abe that he was resigning worked indirectly as a plus for the dollar, though, by making the yen less attractive.

Abe's decision followed public outrage over a string of scandals, including lost records of social security payments, and the stunning defeat of the ruling Liberal Democratic Party in July's upper house elections.

"It's certainly a negative factor to the yen," said Kazuyuki Takami, a senior dealer at Bank of Tokyo-Mitsubishi UFJ.

Traders said the dollar may resume its climb against the yen, possibly to 115 yen, on buying by European and U.S. traders in the near term.

"European and U.S. players dislike political uncertainty, thus we need to pay close attention to how they react to it," said Saburo Matsumoto, a senior dealer at Sumitomo Trust and Banking Co.

The dollar fell against other regional currencies, sinking to 46.7010 Philippine pesos from 47.100, and to 1.5162 Singapore dollars from 1.5196.