Investing.com - The dollar was lower against the yen on Wednesday as signs of dissent within Japan’s government over aggressive monetary easing supported the yen, while the euro was higher after Tuesday’s upbeat German economic sentiment data.
During European morning trade, the dollar was down against the yen, with USD/JPY sliding 0.22% to 93.36.
On Tuesday, Japan’s Finance Minister Taro Aso said the government is not considering buying foreign bonds as a part of its monetary easing plan, one day after Prime Minister Abe said the idea was one option for monetary easing.
Investors were awaiting an announcement on nominees to replace outgoing Bank of Japan Governor Masaaki Shirakawa, whose policies the prime minister has criticized for not going far enough to combat deflation.
The yen was little changed after official data showed that Japan’s trade deficit rose to a record JPY1.629 trillion in January. However, the data showed that exports increased 6.4% year-on-year, the first increase in eight months.
The dollar was lower against the euro, with EUR/USD rising 0.18% to 1.3413.
Data on Tuesday showed that the ZEW index of German economic sentiment hit a 34-month high in February.
However the euro’s gains looked likely to remain capped ahead of the outcome of the upcoming general elections in Italy, amid wariness that a hung parliament could hamper efforts to implement further economic reforms.
The greenback was trading close to seven-month highs against the pound, with GBP/USD inching up 0.06% to 1.5435, as recent weak economic data added to fears over a triple-dip recession and the risk of the U.K. losing its triple-A sovereign rating.
Elsewhere, the greenback was lower against the Swiss franc, with USD/CHF down 0.29% to 0.9199.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.01% to 1.0115, AUD/USD unchanged at 1.0355 and NZD/USD dropping 0.86% to 0.8396.
The New Zealand dollar fell sharply after Reserve Bank of New Zealand Governor Graeme Wheeler said the currency is overvalued and warned that the bank is ready to intervene.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.16% to 80.43.
The Federal Reserve was to release the minutes of its most recent policy meeting later in the trading day, while the U.S. was also to release official data on building permits and housing starts.
