Investing.com - The yen and Australian dollar strengthened further in Asia on Wednesday after data sets that pointed to economic improvement in output and wages in Japan and credit growth in Australia.
Japan's March industrial output data rose 0.3% the first gain in two months, but below expectations. Analysts had expected a gain of 0.5%.Shortly after data showed that average cash wages rose 0.7%, well above expectations for a 0.2% gain and the first rise in three months.
Still, analysts cautioned that on the wage data, earnings have been led by overtime pay and twice-annual bonuses built into most salary scales and only a few large companies are raising base wages for fiscal 2014 that began on April 1.
Separately Australia's March total private sector credit growth rose 0.4%, matching expectations.
USD/JPY traded at 102.42, down 0.21%, after the data, while AUD/USD strengthened further to 0.9279, up 0.12%.
Later in Japan, March housing starts are due at 1400 (0500 GMT) followed by the Bank of Japan's semi-annual Outlook Report at 1500 (0600 GMT).
Housing starts are forecast at a decline of 2.9%, which would be the first fall in 19 months. In the BOJ's Outlook Report, the board is unlikely to make any major change to its medium-term outlook presented in January, including its median forecast for core CPI at up 1.9% in fiscal 2015.
Overnight, the dollar traded largely higher against most major currencies on after investors shrugged off a soft consumer confidence report and took up positions anticipating the Federal Reserve will make further cuts to its stimulus program this week.
The Conference Board, a market research group, said its consumer confidence index declined to 82.3 in April from a 83.9 in March, whose figure was revised up from a previously reported 82.3.
Analysts had expected the index to inch down to 83.0 in April.
The Present Situation Index decreased to 78.3 from 82.5, while the Expectations Index was virtually unchanged at 84.9 versus 84.8 in March.
“Consumer confidence declined slightly in April, as consumers assessed current business and labor market conditions less favorably than in March,” Lynn Franco, Director of Economic Indicators at The Conference Board, said in a statement.
“However, their expectations regarding the short-term outlook for the economy and labor market held steady. Thus, while sentiment regarding current conditions may have slipped a bit, consumers do not foresee the economy, or the labor market, losing the momentum that has been building up over the past several months.”
The dollar largely ignored the data as the report was not seen as weak enough to indicate the economy was softening to the point that the Federal Reserve will slow up the pace at which it tapers its monthly bond-buying program.
Fed bond purchases, currently set at $55 billion a month, weaken the dollar by suppressing long-term borrowing costs, and expectations for further Fed tapering tends to strengthen the greenback.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.01% at 79.88.
Aside from the Fed's announcement on monetary policy, markets on Wednesday will track preliminary data on first quarter GDP, as well as the ADP report on private-sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to release data on manufacturing activity in the Chicago region.