Investing.com - The yen gathered strength and the Australian dollare held gains in Asia on Thursday with remarks by the Bank of Japan governor and Chinese data underlying the tone of trade.
In Australia, the NAB's Business Confidence and Current Conditions index showed business confidence eased in the first quarter, but remained at elevated levels, while conditions recovered slightly and touched the highest level in six quarters.
AUD/USD traded at 0.9380, up 0.11%, after the data and following China March actual foreign direct investment that fell 1.47% to $12.24 billion. China is a top export destination for Australian products like iron ore.
USD/JPY traded at 101.95, down 0.27%, after Bank of Japan Governor Haruhiko Kuroda repeated Thursday that aggressive easy policy launched last April will continue and will take Japan out of years of deflation.
"Japan's economy has continue to recover moderately as a trend," Kuroda said at the opening of a meeting of regional central bank officials.
Kuroda said the outlook for consumer prices was up, with the year-on-year rate in core consumer prices expected to be around 1.25% for some time, not including a sales tax hike on April 1 to 8% from 5%.
Kuroda repeated the BOJ's mantra that it will continue with quantitative and qualitative easing, aiming to achieve the price stability target of 2%, by 2015.
Overnight, the dollar traded largely higher against most major currencies, looking past dovish comments from Federal Reserve Chairwoman Janet Yellen and rising on demand from investors ditching the yen due to strong Chinese data.
The Federal Reserve will keep benchmark interest rates low even as the economy improves to ensure sustained recovery, Yellen said earlier.
Monetary authorities hope to see the unemployment rate at the end of 2016 reaching 5.2-5.6% and inflation at 1.7-2%, Yellen said.
"If this forecast was to become reality, the economy would be approaching what my colleagues and I view as maximum employment and price stability for the first time in nearly a decade. I find this baseline outlook quite plausible," Yellen said in prepared remarks in a speech she delivered at the Economic Club of New York.
In the meantime, markets should pay close attention to inflation and unemployment rates, as hiccups can serve as weather vanes when it comes to monetary policy and how long interest rates remain low.
"The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained," Yellen said.
Elsewhere, U.S. industrial production rose 0.7% in March from February, beating expectations for a 0.5% reading, which supported the dollar despite soft housing data.
The Commerce Department reported earlier that housing starts rose 2.8% in March to 946,000, missing analyst forecasts for a 6.4% increase to 973,000 units.
Separately, building permits, an indicator of future demand for housing, fell 2.4% in March to 990,000, defying market expectations for a 0.6% increase.
Meanwhile in the euro zone, data revealed that the annual inflation rate slowed to 0.5% in March from 0.7% the previous month, but in line with expectations
Core inflation, which strips out volatile items like food and energy costs, fell to 0.7% from 1.0% in February, missing expectations for a 0.8% reading.
Euro zone inflation has now been in the European Central Bank's danger zone of below 1% for six straight months, fuelling speculation that policymakers will need to implement fresh stimulus measures to shore up the fragile recovery in the euro area.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.21% at 79.75.
On Thursday, the U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.