The yen gained in Asia on Wednesday ahead of closely-watched gross domestic product data from Japan that will set the near-term market tone ahead of January consumer prices in the US later in the day.
USD/JPY changed hands at 107.76, down 0.06%, while AUD/USD traded at 0.7859, up 0.01%.
Japan reports provisional fourth quarter GDP with a 0.9% gain seen on year and a 0.2% rise on quarter.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.46% to 89.60.
Overnight, The dollar traded lower against a basket of major currencies as sharp rallies in both yen and euro weighed on upside momentum ahead of a crucial consumer inflation report due Wednesday.
The Bank of Japan (BoJ) was poised to start reining in loose monetary policy measures despite expectations that BoJ governor Kuroda – who has repeatedly affirmed the need for accommodative monetary policy – would be reappointed for a second term.
The sharp decline in the dollar comes against somewhat hawkish comments from Cleveland Fed president Loretta Mester who said Tuesday that she expects tax cuts to add to growth, presenting upside risk, while inflation is expected to gradually rise to 2% over next one to two years, creating the need for further Federal Reserve rate hikes in 2018 and 2019.