The US dollar hit a 17-month trough against the yen on Wednesday and remained broadly weaker on bets that the Bank of Japan would not intervene to halt the yen's rally and on Federal Reserve minutes that confirmed a dovish tone at the US central bank. The dollar fell below 110 yen for a second straight day and hit 109.36, its lowest since late October 2014. Japanese Prime Minister Shinzo Abe told the Wall Street Journal that countries should avoid seeking to weaken their currencies with "arbitrary intervention."
The remarks fuelled expectations that the BoJ likely would not intervene to halt the yen's rally. In addition, minutes of the Fed's March policy meeting confirmed expectations for a dovish tone by showing a consensus emerged that risks from a global economic slowdown warranted a cautious approach. Both developments hurt the dollar.
The dollar last traded down 0.61 percent against the yen at 109.69 yen. The dollar has fallen more than 8 percent against the yen so far this year, partly on a more dovish Fed.
"The yen's strength is on concerns that the BoJ is not going to be doing anything," said Jason Leinwand, managing director at derivatives advisory firm Riverside Risk Advisors in New York. At the same time, he said, "you got a really dovish tone out of the minutes." Analysts also said riskier and commodity-linked currencies gained against the dollar after data showing US crude oil inventories unexpectedly fell from record highs last week, which led to more than 5 percent gains for US crude oil prices.
"That gave risky currencies a bit of a boost, and that is one of the factors weighing on the dollar," said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York, in reference to the inventories data. The commodity-linked Australian dollar was last up 0.73 percent at $0.76. The euro was last up 0.16 percent at $1.1400 after hitting a session high of $1.1432, near Friday's 5-1/2-month high of $1.1437. The dollar hit a roughly 5-1/2-month low against the Swiss franc of 0.9532 franc. The dollar index, which measures the greenback against a basket of six other major currencies, was last down 0.18 percent at 94.457.
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