Investing.com - The yen gained on Wednesday as China warned North Korea to refrain from further missile tests as tensions grow on the Korean peninsula over Pyongyang's provocative actions in the past month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.05% to 101.76. USD/JPY changed hands at 113.79, down 0.17%, while AUD.USD rose 0.18% to 0.7602.
Chinese Foreign Minister Wang Yi said on Wednesday North Korea must stop nuclear and missile tests and that the United States and South Korea must also stop joint military drills. Wang made the comments at his annual news conference on the sidelines of the annual meeting of China's parliament in Beijing.
Ahead in Asia, China reports its February trade balance with oil imports figures expected to draw close attention on the world's second largest economy.
Overnight, the dollar inched higher against a basket of major currencies on Tuesday, as markets digested the possibility of a March rate hike, ahead of the Federal Reserve’s monetary policy meeting next week.
The U.S. central bank is poised to increase interest rates at its March 14-15 meeting, after Fed Chair Janet Yellen hinted last week that should U.S. economic data come in as expected, then further monetary tightening
"would likely be appropriate" this month.
According to Investing.com’s Fed rate monitor tool, nearly 90% of traders expect a rate hike in March, compared to just 81.9% of traders on Monday.
Some analysts are also looking to the Fed policy meeting for clues on the number of rate hikes in 2017. In a research note to clients, Morgan Stanley (NYSE:MS) said it “thinks this [March] will be the first of three hikes in 2017 and four hikes in 2018”.
Meanwhile U.S. trade data had little impact on the greenback, after the U.S. trade deficit climbed to an almost five year high.
The trade gap widened by 9.6% to $48.5 billion in January, the highest level since March 2012, and in line with economists’ forecasts.
Elsewhere, the euro shrugged off uncertainty concerning the outcome of the French presidential election, after outgoing president Francois Hollande vowed to “do everything” in his power to stop the anti-European Union
candidate Marine Le Pen from winning the election.