Investing.com - The dollar was lower against the yen in cautious trade on Wednesday after the G7 indicated concerns over excessive moves in Japan’s currency and investors awaited the outcome of Thursday’s Bank of Japan policy meeting.
During European morning trade, the dollar was lower against the yen, with USD/JPY sliding 0.14% to 93.32.
The yen initially weakened against the dollar and the euro on Tuesday after a statement by the G7 reaffirmed a commitment to market-determined exchange rates and said that fiscal and monetary policy won't target exchange rates.
However the yen turned sharply higher after a G7 official said the statement was misinterpreted and was intended to signal concern over the recent sharp decline in the yen.
The statement came ahead of a meeting of finance ministers from the G20 group later in the week, which was likely to feature discussion on competitive currency devaluations.
Japanese Finance Minister Taro Aso said Tuesday that Japan would tell the G20 that it intends to maintain monetary and economic policies aimed at beating deflation.
Investors also remained cautious ahead of the outcome of the BoJ’s policy meeting on Thursday although the bank was widely expected to hold off from announcing any changes to monetary policy before a new governor is appointed.
Elsewhere, the dollar was lower against the euro, with EUR/USD rising 0.17% to 1.3475.
The greenback was trading close to six-month highs against the pound, with GBP/USD slipping 0.11% to 1.5643 amid expectations that the Bank of England would cut growth forecasts in its quarterly inflation report due out later in the session.
Elsewhere, the greenback edged higher against the Swiss franc, with USD/CHF rising 0.10% to 0.9180.
The Swiss franc showed little reaction after official data showed that domestic producer price inflation fell 0.1% in January, compared to expectations for a 0.3% increase.
The greenback was broadly lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.03% to 1.0023, AUD/USD climbing 0.36% to 1.0344 and NZD/USD up 0.15% to 0.8417.
The Australian dollar found support after a domestic index of consumer sentiment climbed sharply in January, indicating that a series of interest rate cuts are supporting confidence in the economy.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slid 0.12% to 80.00.
The euro zone was to release official data on industrial production later Wednesday, while the U.S. was to produce government data on retail sales.
