The yen rose smartly on Wednesday as oil prices fell on diminished supply worries, while sterling slumped after a British central banker indicated the bank's rate tightening cycle may be nearing an end.
The yen rose about a half percent against both the dollar and the euro as oil prices, which had risen to a new record of $50.47 for US crude on Tuesday, fell more than 2 percent to a low of $48.40 on news of a cease-fire agreement between rebels and the government in oil-exporter Nigeria.
A government report showing US oil stocks had risen in the latest week, rather than falling as forecast, also pushed down energy prices.
"News of a build-up rather than a draw in stocks put the offer back into euro/yen and dollar/yen," said Grant Wilson, vice president at Mellon Bank in Pittsburgh.
The yen recently has been falling against most major currencies on the belief that higher oil prices would be particularly harmful to Japan, which imports all of its oil.
"We have had that two-week run-up (in crude oil prices) and the yen has been hammered," said Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston.
Now, "the yen has been correcting (upwards) as oil has come off its highs," he said.
Crude oil closed at $49.51 per barrel, down 39 cents.
The dollar hit session lows against the yen around 110.67 yen according to Reuters data and was trading at 110.83 yen, down 0.47 percent, in late New York trade.
The euro was down 0.39 percent against the yen at 136.72 yen. The yen had hit a six-week low against the dollar on Tuesday at around 111.73 yen per dollar and a four-month low versus the euro near 137.59 yen.
Against the dollar, the euro was trading at $1.2334, up 0.09 percent on the day.
Earlier, the dollar firmed modestly against the euro following release of the final reading of US second-quarter economic growth, which showed activity in the world's biggest economy was brisker than previously thought.
US gross domestic product expanded 3.3 percent in the second quarter, overstepping economists' forecasts for a rise of 3.0 percent and up from the preliminary estimate of 2.8 percent.
Sterling fell sharply after Bank of England Monetary Policy Committee member Kate Barker told Reuters the central bank could be nearly done with raising interest rates for now as recent data, particularly on housing, have been weak.
"She didn't say anything that the market didn't already know, but attaching a monetary policy member's name to the view that the rising interest rate cycle may be at or near its end was the final stamp," said Joe Francomano, vice president of foreign exchange at Erste Bank in New York.
Sterling was down 0.77 percent to $1.7993.
The US dollar sagged to its lowest levels since May 1993, below C$1.2680 according to Reuters data. By late afternoon, the dollar was trading at C$1.2695.
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