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The U.S. Dollar traded lower during the trading session on Wednesday in Asia following the release of the inflation data from China which was below most investor and analyst expectations while the markets kept a close observation on the Bank of Japan.

Down From the Previous Rally

The greenback traded higher during Wednesday’s early trading session on the rise in U.S. Treasury yields. The 10-year U.S. Treasury touched a ten-month high during the trading session on Tuesday supported by the Bank of Japan’s recent move. The ten-year yields were stable at 2.551% in Asia which is higher than its close in the United States of 2.546% and has traded to as high as 2.555%, the highest seen since last March.

However, it did not manage to hold further gains against the Japanese yen on the announcement and recent move of the Bank of Japan to cut its Japanese government bonds purchases that led to speculation and market fears of tapering.

The U.S. dollar was lower at 112.62 against the yen prior to a 0.5% decline during the previous trading session following the Japanese central bank’s move to cut down the number of its Japanese government bond purchases from its regular buying operations.

The dollar index traded higher during the last session up to 92.536 against six other major currencies compared to its previous overnight high of 92.640. On the other hand, the euro traded lower during the same trading session at $1.1933 hovering below a four-month high of $1.2098 during the Thursday market session last week.

Despite the slight move of the currency’s recent movement due to the recent announcements from the central bank, it led to the current market speculation that the Bank of Japan would start unwinding its large and incredibly easy monetary stimulus.

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USD vs JPY

Shortly after the inflation data report from China, the dollar declined in Asia on Wednesday with the greenback trading 0.35% down against the Japanese yen at 112.27 as the markets assessed the recent move of the Japanese central bank during the previous session.

The U.S. dollar index then retreated by 0.04% against six major currencies to 92.19. The index pushed higher overnight from previously trading at a four-month low against a basket of six major currencies on the mixed market sentiments on the Federal Reserve’s current outlook on the monetary policy.

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