The dollar dipped against the yen on Thursday a day after posting its largest daily percentage gains in around six months boosted by faster U.S. economic growth and hopes for a diplomatic breakthrough with North Korea.
USD/JPY was down 0.27% to 106.55 by 03:35 AM ET (07:35 AM GMT), after ending Wednesday’s session with gains of 1.4%, the largest increase since September 11.
The dollar was boosted after data on Wednesday showing that the U.S. economy grew by a larger than initially estimated 2.9% in the fourth quarter.
The data left the way clear for a slightly more aggressive pace of interest rates hikes by the Federal Reserve this year. The Fed hiked rates for the first time this year last week and stuck to its projection for three rate hikes this year.
The U.S. currency received an additional boost after China said on Wednesday that North Korea’s leader Kim Jong Un had pledged his commitment to denuclearization while U.S. President Donald Trump tweeted that Kim looked forward to meeting with him.
The developments prompted speculation that a breakthrough over North Korea’s nuclear program could be growing closer.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was little changed near a one-week high of 89.71.
The euro was steady, with EUR/USD at 1.2316 after falling 0.75% on Wednesday.
The single currency remained on the defensive after soft euro zone economic data and dovish-sounding comments by Erkki Liikanen, a member of European Central Bank’s governing council earlier in the week.
The pound was almost unchanged against the dollar, with GBP/USD last at 1.4069.
Investors were looking ahead to U.S. consumption and price data later in the day, which will be closely watched for indications on the possible direction of monetary policy.