Investing.com - The dollar moved higher against the yen on Wednesday, recovering from the three-week lows hit in the previous session, as concerns over the outlook for global growth bolstered safe haven demand for the Japanese currency.
USD/JPY was up 0.25% to 108.40, after falling as low as 107.74 overnight.
The yen strengthened broadly on Tuesday after the International Monetary Fund cut its forecast for global growth for 2014 and 2015 and warned that the global recovery is weak and uneven.
The IMF is now forecasting global economic growth of 3.3% this year, down from 3.4% in July and expects growth of 3.8% in 2015, compared to an earlier prediction of 4.0%.
Investor sentiment was also hit after a report showing a steep decline in German factory orders in August fuelled fears that the euro zone’s largest economy is falling into a recession.
The yen found support earlier Tuesday after Japanese Prime Minister Shinzo Abe voiced concerns over the impact of a weaker yen on the economy.
The Bank of Japan left monetary policy unchanged at its policy meeting on Tuesday, but acknowledged that declining domestic demand as a result of a sales tax increase in April was leading to economic weakness.
Investors were turning their attention to the minutes of the Federal Reserve’s September meeting, due out later in the day, for fresh indications on the future possible direction of U.S. monetary policy.
The dollar has rallied against the yen and the euro in recent months amid expectations that the Fed is growing closer to hiking rates, while central banks in Japan and Europe look likely to stick to a looser monetary policy stance.
The dollar was also higher against the euro, with EUR/USD down 0.35% to 1.2624.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.30% to 86.02, off Tuesday’s lows of 85.64.
Elsewhere, the euro was almost unchanged against the yen, with EUR/JPY at 136.91, holding above Tuesday’s one-month lows of 136.54.