The yen rose for the first day in five against the dollar on speculation the U.S. Treasury's $250 billion investment in financial institutions won't prevent a recession in the world's biggest economy.
Japan's currency also gained versus the euro as U.S. and Asian stocks fell, damping investors' confidence in higher- yielding assets. The dollar traded near a one-week low against the euro before data that economists predict will show U.S. retail sales declined at a faster pace as job losses and a housing slump curb spending.
The yen snapped two days of losses versus the euro as the MSCI Asia-Pacific Index of regional shares slipped 0.9 percent after the Standard & Poor's 500 Index lost 0.5 percent yesterday. The yen climbed 8 percent versus the euro this month as mounting credit-market losses encouraged investors to shed higher- yielding assets funded by low-cost loans in Japan.
The dollar yesterday reached a one-week high of 103.07 yen, before retreating on concern U.S. government reports will show that the economic slowdown is deepening.
U.S. retail sales fell 0.7 percent in September following a 0.3 percent decline the prior month, according to the median estimate of economists. The Commerce Department will release the data at 12:30 GMT in Washington. Figures on Oct. 17 may show housing starts fell to a 17-year low.
The London interbank offered rate, or Libor, which banks charge each other for three-month dollar loans, remained 314 basis points above the Federal Reserve's target rate of 1.5 percent yesterday. The dollar Libor-OIS spread, a gauge of demand for cash, narrowed 13 basis points to 341 basis points. It was at 105 basis points on Sept. 15 and 24 basis points on Jan. 24.
The Bank of Japan said yesterday it will offer lenders an unlimited amount of dollars, one day after the Fed said the European Central Bank, Bank of England and Swiss National Bank would offer European banks as many dollars as they want at fixed interest rates against ``appropriate collateral.''
EUR/USD having established session low on $1,3535, the pair has raised above a mark $1,3600.
GBP/USD has slightly receded from the reached session low in the field of $1,7390 in area $1,7450.
USD/JPY undertakes attempts to overcome area of a session low on Y101,10.
UK labour market data is due at 0830GMT with the claimant count expected to rise 36k to lift the unemployment rate to 2.9%. Averageearnings are seen coming in at 3.5% 3m y/y, 3.7% ex-bonus. The claimant count unemployment jumped by 32,500 on the month in August.
European data for Wednesday: Eurozone September final HICP is due at 0900GMT and is
expected to Come in at 0.1% m/m, 3.6% y/y.
US data continues at 1230GMT with the NY Fed Empire State Survey for October, Retail & Food Sales and PPI for September. The Empire State Index is expected to fall to a reading of
-10.0 in October after tumbling to -7.41 in the September.
Retail sales are expected to fell 0.7% in September, as industry vehicle sales slowed in the
month. Sales excluding vehicles is expected to fall 0.3% on another soft reading for gasoline.
PPI is expected to fall 0.5% in September after the 0.9% drop in August. Energy prices fell further in the month, while core PPI is expected to rise 0.2%.
At 1400GMT is expected to show business inventories rise 0.5% in August. Factory inventories were already reported up 0.6%, while wholesale inventories were already reported up 0.8%.