TOKYO- The dollar was broadly steady ahead of a key US inflation report later on Wednesday, though it rose on the yen as traders further digested comments from Japan’s top central banker on a possible early exit from its negative interest rate policy.
The US currency advanced around 0.2 percent to 147.39 against the yen. It has now firmly retraced its biggest one-day percentage rise in two months that was made on Monday following remarks from Bank of Japan (BOJ) Governor Kazuo Ueda over the weekend.
Investors have had more time to consider Ueda’s comments more carefully, said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
“The statement to our mind was quite a conditional one, (Ueda) didn’t promise anything,” he said.
Influential ruling party lawmaker Hiroshige Seko on Tuesday also signaled his preference for ultra-loose monetary policy, after Ueda’s comments pushed up the yen and bond yields.
The yen has been under relentless pressure against the dollar as the BOJ remains a dovish outlier among global central banks, especially since the Federal Reserve began its aggressive rate-hike cycle in March 2022.
Data released earlier on Wednesday showed Japan’s annual wholesale inflation slowed in August for an eighth straight month, although at 3.2 percent it remains above the central bank’s 2 percent target.
More broadly, the dollar held firm, though moves were subdued as traders awaited a closely watched US inflation reading due later on Wednesday.
Sterling slipped 0.05 percent to $1.2489, while the Australian dollar fell 0.03 percent to $0.6408.
The US dollar index which measures the greenback against a basket of rivals, was steady at 104.61, after slipping to a one-week low on Monday and clocking its largest daily fall in two months.
