The dollar slips against the yen in the course of Wednesday’s session, dragged from a session high for one-month set earlier in the week, with its waning advanced momentum after breaking technical support levels.
The greenback declined 0.7 percent to 109.95 yen, dwindling from Monday’s upbeat of 111.455 yen, citing the dollar’s strongest level since late April.
The dollar bounced against the strengthening yen, after posting earlier declines below support at levels about 110.30 yen on the trader’s technical analysis tool Ichimoku chart.
The yen remained solid after Prime Minister Shinzo Abe is expected to announce a delay to the planned sales tax increase.
It was reported that Abe told members of his Liberal Democratic Party that he will delay the tax increase by two and half years. The premier is scheduled to hold a meeting.
As assumptions on the delayed sales tax hike is expected, one highlight is whether that will be supported by more fiscal spending and how it will take effect on Tokyo stocks, including risk sentiments.
A strategist at UBS Wealth Management Tan Teck Leng said, 'The market is kind of looking at between 5-10 trillion yen,' citing anticipations on a potential extra Japanese budget.
Mr. Tan added, if there are any supplementary budget with unclear expectations, disappointments is widely expected.
Meanwhile, the dollar declined by about 0.1 percent to 95.764 against other major currencies, dragged from a session high for two-month at 95.968.
Amid the data announced on Tuesday, the U.S. consumer spending posted its biggest rally for over six years in April, but it has seen a decline in consumer confidence, including a survey on business activity in the U.S. Midwest.
As the investors continued to lower their expectations for a potential rate hike by the Fed in the near term, it has sent the dollar to struggle.
Aussie Dollar Edge Higher
The Australian dollar ends higher after the first-quarter economic growth of the country topped the market forecasts and encourage investors to scale back anticipations for the Reserve Bank of Australia to lower the rates.
The Aussie dollar rallied $0.7300 at one point, which was dragged from a 2-1/2 month low of $0.7145 set in the prior week. It changed hands at $0.7273 in late trade, up 0.6 percent.
However, some analysts mentioned that earlier gains in the Australian dollar could be limited in the near-term regardless of a solid GDP number.
A strategist at ABN AMRO Roy Teo said, 'In our view, the job market remains fragile. Hence domestic demand will remain weak.'