[NEW YORK] The US dollar fell against a currency basket for the first time in seven days on Wednesday, as investors consolidated gains and booked profits on a day with no major US economic data and as global stock markets were down.
The greenback posted steep losses against the yen, which has fallen about 3.2 per cent over the last seven days. The yen's recent losses had halted a run of gains that had propelled it to 18-month highs versus the dollar early this month.
"The dollar's bias hasn't meaningfully brightened given deep market skepticism in the Federal Reserve firing an interest rate hike in the near future," said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.
"Consequently, the foggy outlook for a Fed rate hike risks undercutting dollar rallies."
Also stemming the yen's gains was a series of warnings from Japanese finance minister Taro Aso that the government would intervene in the currency market. Koichi Hamada, an economic adviser to Prime Minister Shinzo Abe, was the latest to sound a market alert on the yen.
Analysts believe Japan will be wary of intervening to offset flows of money into the yen before it hosts a Group of 7 meeting this month, but Tokyo is clearly unhappy with a 14 per cent rise in the currency since December.
In late trading, the dollar index, which tracks the greenback against a basket of six other currencies, shed 0.5 per cent to 93.797, moving away from a two-week high of 94.356 set overnight.
Against the yen, the US dollar was down 0.8 per cent at 108.45 yen after climbing to a two-week high of 109.37 yen in Asian trading.
"The lack of intervention comments today pretty much helped the yen," said Peter Ng, senior FX trader at Silicon Valley Bank in Santa Clara, California.
He cited key technical levels in dollar/yen, with investors eyeing 1.10 yen on the upside, and 107.80 on the downside.
The euro rose 0.5 per cent against the US dollar to US$1.1427 .
Western Union's Mr Manimbo said key to the US dollar's performance this week will be the April and May data on retail sales and consumer sentiment due for release on Friday.
Forecasts showed a supposed pickup in both numbers which would be consistent with views about an economy recovering after a first quarter slump.
"Any disappointing outcomes would suggest a longer slump for the economy which would keep the Fed at bay, and the dollar at risk of revisiting recent lows," Mr Manimbo said.