Investing.com - The dollar slipped lower against the other major currencies on Wednesday, as investors locked in profits from the greenback’s recent gains, especially against the yen after Japan warned that it is prepared to intervene in the foreign exchange market.
USD/JPY dropped 0.62% to 108.60, off Tuesday’s highs of 109.36.
The dollar strengthened against the yen in the previous two sessions after Japanese Finance Minister Taro Aso said Monday that financial authorities are prepared to intervene in the currency market if excessive moves in the yen are enough to affect the country’s economy.
But many investors expect that Japan will refrain from taking step to weaken the yen ahead of a G7 meeting its is hosting later this month, in the absence of support for such a move.
Late last month the U.S. Treasury Department added Japan to a watch list of countries it is monitoring to gauge whether their foreign exchange policies provide an unfair trade advantage.
Aso said Monday the Treasury’s move to put Japan on a watch list “won’t constrain” Tokyo’s currency policy.
EUR/USD edged up 0.18% to 1.1393, after hitting one-week lows of 1.1359 on Tuesday.
The dollar was higher against the pound, with GBP/USD down 0.23% at 1.4410 and was lower against the Swiss franc, with USD/CHF slipping 0.17% to 0.9741.
Earlier Wednesday, the U.K. Office for National Statistics said that manufacturing production increased by 0.1% in March, worse than expectations for a rise of 0.3% and following a decline of 0.9% a month earlier.
The report also showed that industrial production increased by 0.3%, missing forecasts for a gain of 0.5% and following a decline of 0.2% in the preceding month.
The Australian dollar was lower, with AUD/USD shedding 0.22% at 0.7347, while NZD/USD rose 0.41% to 0.6791.
Elsewhere, USD/CAD held steady at 1.2914.
Sentiment on the commodity currencies remained vulnerable as oil prices moved back lower on Wednesday, following news Canadian oil sand production is set to rise following forced closures due to wildfires.
In addition, the American Petroleum Institute said on Tuesday that U.S. crude inventories rose by 3.45 million barrels to a record 543.1 million barrels in the week ending May 6.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.17% at 94.06.