Investing.com - The dollar fell against most major currencies on Tuesday after the Group of Seven industrialized nations issued a statement warning against using monetary policy to craft outright devaluations, which markets interpreted as message to Tokyo.
The news sent investors snapping up yen positions that lifted the euro and other currencies as well.
In U.S. trading on Tuesday, EUR/USD was up 0.33% at 1.3449.
Earlier, a G7 statement warned member nations not to use monetary policy to deliberately weaken currencies, leaving markets edgy over concerns that yen may be sliding too far.
"We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets. We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates," the G7 said on the Bank of England's web site.
"We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate."
The statement came ahead of G20 meeting scheduled to kick off Friday likely focus on competitive currency policies.
Japanese Finance Minister Taro Aso insisted on Tuesday that Japan would tell the G20 that it intends to maintain monetary and economic policies aimed at beating deflation and is not out to actively devalue its currency.
Under Prime Minister Shinzo Abe, Japan has taken steps to allow the yen to weaken against other currencies as part of a plan to prioritize economic growth over keeping the consumer price index in a tight target range but has not devalued the currency.
Meanwhile in the U.S., the government posted a surprise budget surplus in January.
In a report, the Department of the Treasury said that U.S. federal budget balance rose to a seasonally adjusted USD3.0 billion, from a USD300 million shortfall in December.
Economists were expecting a USD2 billion shortfall in January.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.88% at 1.5658.
In a report, the Office for National Statistics revealed that the U.K.'s year-on-year consumer price index rose 2.7% in January, unchanged from December.
Analysts had expected consumer prices to rise 2.8% in January.
Month-over-month, January's CPI fell 0.5% compared to expectations for a 0.4% decline and after rising 0.5% in December.
The rate of inflation remains above the Bank of England’s 2.0% target, but the Bank of England will not be obliged to write to the Chancellor of the Exchequer, as the inflation rate is less than a percentage point above or below its target.
Core CPI, which excludes volatile food, energy, alcohol, and tobacco prices, jumped 2.3% year-on-year in January from 2.4% in December.
Analysts had expected core prices to hold steady at 2.4%.
The retail price index rose 3.3% last month, compared to expectations for a 3.2% increase, after rising 3.1% December.
Softer-than-expected pricing data sent the pound slumping against the greenback despite the greenback's slide elsewhere.
The dollar slid against the yen, with USD/JPY trading down 0.81% at 93.57 and fell against the Swiss franc, with USD/CHF trading down 0.31% at 0.9174.
The dollar was lower against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.20% at 1.0028, AUD/USD up 0.47% at 1.0304 and NZD/USD trading up 0.60% at 0.8400.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29% at 80.15.
On Tuesday, the U.S. is to publish official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish data on import prices, business inventories and crude oil stockpiles.
The news sent investors snapping up yen positions that lifted the euro and other currencies as well.
In U.S. trading on Tuesday, EUR/USD was up 0.33% at 1.3449.
Earlier, a G7 statement warned member nations not to use monetary policy to deliberately weaken currencies, leaving markets edgy over concerns that yen may be sliding too far.
"We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets. We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates," the G7 said on the Bank of England's web site.
"We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate."
The statement came ahead of G20 meeting scheduled to kick off Friday likely focus on competitive currency policies.
Japanese Finance Minister Taro Aso insisted on Tuesday that Japan would tell the G20 that it intends to maintain monetary and economic policies aimed at beating deflation and is not out to actively devalue its currency.
Under Prime Minister Shinzo Abe, Japan has taken steps to allow the yen to weaken against other currencies as part of a plan to prioritize economic growth over keeping the consumer price index in a tight target range but has not devalued the currency.
Meanwhile in the U.S., the government posted a surprise budget surplus in January.
In a report, the Department of the Treasury said that U.S. federal budget balance rose to a seasonally adjusted USD3.0 billion, from a USD300 million shortfall in December.
Economists were expecting a USD2 billion shortfall in January.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.88% at 1.5658.
In a report, the Office for National Statistics revealed that the U.K.'s year-on-year consumer price index rose 2.7% in January, unchanged from December.
Analysts had expected consumer prices to rise 2.8% in January.
Month-over-month, January's CPI fell 0.5% compared to expectations for a 0.4% decline and after rising 0.5% in December.
The rate of inflation remains above the Bank of England’s 2.0% target, but the Bank of England will not be obliged to write to the Chancellor of the Exchequer, as the inflation rate is less than a percentage point above or below its target.
Core CPI, which excludes volatile food, energy, alcohol, and tobacco prices, jumped 2.3% year-on-year in January from 2.4% in December.
Analysts had expected core prices to hold steady at 2.4%.
The retail price index rose 3.3% last month, compared to expectations for a 3.2% increase, after rising 3.1% December.
Softer-than-expected pricing data sent the pound slumping against the greenback despite the greenback's slide elsewhere.
The dollar slid against the yen, with USD/JPY trading down 0.81% at 93.57 and fell against the Swiss franc, with USD/CHF trading down 0.31% at 0.9174.
The dollar was lower against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.20% at 1.0028, AUD/USD up 0.47% at 1.0304 and NZD/USD trading up 0.60% at 0.8400.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29% at 80.15.
On Tuesday, the U.S. is to publish official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish data on import prices, business inventories and crude oil stockpiles.