Investing.com - The dollar rose to seven year highs against the yen on Wednesday as investors awaited the release of the minutes of the Federal Reserve’s latest meeting later in the day.
USD/JPY hit highs of 117.78, the most since October 2007 and was last at 117.69, 0.71% higher for the day.
Investors were looking ahead to the minutes of the Fed’s October meeting, which were expected to highlight the growing monetary policy divergence between the U.S. central bank and its peers in Japan and Europe.
The Fed’s October policy statement noted that both the labor market and the inflation outlook were improving.
Markets are currently expecting the U.S. central bank to start raising rates sometime around September 2015. In contrast, the Bank of Japan and the European Central Bank are expected to continue monetary easing in order to shore up growth and inflation.
The yen remained under heavy selling pressure one day after Japanese Prime Minister Shinzo Abe announced plans to delay a sales tax hike due to take place next year after an increase in April played a part in pulling Japan into a recession.
He also called elections for December, to seek a fresh mandate for his economic policies, which call for a weaker yen.
The decision came after data showed that Japan’s economy fell back into recession in the third quarter, contracting by an annualized 1.6% after a 7.3% contraction in the previous quarter.
The yen showed little reaction after the Bank of Japan left monetary policy on hold on Wednesday, as widely anticipated.
The dollar was little changed after data on Wednesday showed that U.S. housing starts fell unexpectedly in October.
The Commerce Department reported that housing starts fell 2.8% to an annual rate of 1.009 million, compared to expectations for a rate of 1.025 million.
However, the report said the decline was due to a 15.4% drop in the volatile multi-family home segment, while starts for single-family homes, the largest part of the market, rose to their highest level in a year.
In addition, September's starts were revised up a rate of 1.038 million from 1.017 million.
The number of building permits issued last month jumped 4.8% to 1.080 million, the most since June 2008.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.13% to 87.74, holding below last week’s more than four-year highs of 88.36.