Investing.com - The Japanese yen held early weakness on Wednesday followin a less steep than expected drop in second quarter GDP and concern over the Bank of Japan's inflation target noted in July minutes.
USD/JPY traded at 102.29, up 0.02%, while AUD/USD gained 0.04% to 0.9272.
Japan's second quarter preliminary GDP fell 1.7%, less than the 1.8% expected and at an annualized pace of minus 6.8% as an April sales tax hike bit into conmsumption.
GDP is forecast to rebound in July-September, although at a moderate pace, as the impact of the sales tax hike wanes.
At the same time, several of the Bank of Japan's board members expressed a more cautious view on the economic outlook to reach a sustained 2% price stability target by fiscal 2015, according to minutes of the July policy meeting released on Wednesday.
"Some members held a more cautious view of the outlook for prices compared with the forecasts in the baseline scenario, mainly because there seemed to be a high degree of uncertainty surrounding the view that the year-on-year rate of increase in the CPI would reach around 2% around the middle of the projection period (to fiscal 2016)," the minutes showed.
In July, the BoJ decided by a unanimous vote to leave the bank's policy target unchanged as expected, maintaining its overall economic assessment.
In Australia, the August Westpac-MI Consumer Sentiment is due at 1030 Sydney time (0030 GMT) followed by the second quarter wage price index an hour later (0130 GMT).
Consumer sentiment is currently below 100.0 at 94.9 and a big risk to the latest survey could be news of rise in unemployment rate.
The wage price index is expected to post a 0.7% gain for the third straight quarter.
Also due are industrial output, retail sales and fixed asset investment data out of China at 1330 local time (0530 GMT). The forecast for industrial production is a gain of 9.0% year-on-year, while retail sales are seen up 12.4% year-on-year and 17.4% for fixed asset investment.
Overnight, soft German sentiment data weakened the euro and bolstered the dollar, though concerns the Ukraine conflict could flare up anew softened the greenback against other major currencies throughout the trading session.
The ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 8.6 this month, down from 27.1 in July. It was the weakest reading in 20 months and came in well below economists’ forecasts of 18.2.
The current conditions index deteriorated to a seven-month low of 44.3 from 61.8 in July, worse than expectations for a decline to 55.5.
Geopolitical tensions in Eastern Europe are apparently taking their toll on the German economy.
Recent economic reports have indicated that sanctions slapped on Russia due to its alleged meddling in the Ukraine conflict are dragging on the German economy.
Germany is Russia’s largest trading partner in Europe.
The report also indicated that economic growth in Germany will be weaker than expected in 2014.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.01 at 81.57.