Investing.com - The dollar gave up early gains against the yen in Asia Wednesday in a light regional data day with investors closely watching the greenback for sharp divergence as other majors such as the yen, pound and euro appear set on further monetary easing paths.
USD/JP changed hands at 106.96, down 0.16%, while AUD/USD traded at 0.7502, down 0.08%. GBP/USD traded at 1.3074, down 0.29%, while EUR/USD changed hands at 1.1010, down 0.10%.
In Australia, the MI leading index for June came in at a decline of 0.2%, with the previous figure showing a 0.2% gain month-on-month.
The outlook signaled by the leading index is more consistent with Westpac's forecast for growth holding steady around a 3% pace over the next year. The Reserve Bank will update its forecasts for growth and inflation in August for the quarterly Statement on Monetary Policy and has signaled it may lower the cash rate if the updated outlook requires a change in stance.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.10% to 97.16.
Overnight, the dollar hit 4-month highs against a basket of major rivals on Tuesday after better than expected housing data was released stateside and while the International Monetary Fund (IMF) weighed in on the economic damage to the U.K. and euro zone in the wake of U.K.’s decision to leave the European Union (EU), known as a Brexit.
In a report, the U.S. Commerce Department said that housing starts jumped 4.8% to hit a seasonally adjusted 1.189 million units, beating consensus expectations for an increase to only 1.17 million.
At the same time, building permits, considered a leading indicator for the housing market, increased 1.5% to a seasonally adjusted 1.153 million units, settling above forecasts for an increase to 1.15 million.
USD/JPY was creeping back towards the June 24 high, day in which the U.K.’s decision to leave the European Union (EU), known as a Brexit, was revealed.
In that light, the International Monetary Fund (IMF) released its updated global forecasts on Tuesday, reducing the projection for growth in the worldwide economy in 2016 to 3.1%, from the prior 3.2%, though expecting a rebound to 3.4% in 2017.
The U.K. was hardest hit with the IMF cutting its forecast to 1.7% from the prior 1.9% for this year and slashing 2017 growth to 1.3% from April’s estimate of 2.2% due to the Brexit.
The euro zone did not escape unscathed as 2017 growth expectations were cut to 1.4% from the prior 1.6%.
In contrast, the IMF did cut the U.S. forecast to 2.2%, from the prior 2.4%, but said that the Brexit impact on the American economy would be muted and explained that the reduction was due to the weaker than expected read from first quarter gross domestic product.