Investing.com - The dollar hit fresh seven-year highs against the yen on Wednesday after Japan's prime minister decided to delay a planned sales tax hike and was broadly stronger against other major currencies ahead of the minutes of the Federal Reserve's latest policy meeting.
USD/JPY hit new seven-year highs of 117.65 and was last up 0.56% at 117.52.
The yen came under pressure after Japan's Prime Minister Shinzo Abe announced on Tuesday plans to delay a sales tax hike due to take place next year after an increase in April played a part in pulling Japan into a recession.
He also called elections for December, to seek a fresh mandate for his economic policies.
The decision came after data showed that Japan’s economy fell back into recession in the third quarter, contracting by an annualized 1.6% after a 7.3% contraction in the previous quarter.
The yen dropped to fresh to six-year lows against the euro, with EUR/JPY touching highs of 147.53, before pulling back to 147.39.
The euro edged higher against the dollar, with EUR/USD up 0.09% to 1.2543.
The single currency remained mildly supported after a stronger-than-forecast German ZEW economic sentiment index bolstered the outlook for the euro zone’s largest economy.
The pound rose against the dollar, with GBP/USD gaining 0.38% to 1.5687 after the minutes of the Bank of England's November policy meeting showed that members voted unanimously to keep the asset puschase facility program on hold.
However, members Martin Weale and Ian McCafferty voted for the fourth consecutive time to raise interest rates to 0.75% from a record-low 0.5%.
USD/CHF eased 0.08% to 0.9577, while EUR/CHF was flat at 26-month lows of 1.2012, not far from the Swiss National Bank’s exchange rate cap of 1.20 per euro.
The Swiss franc has strengthened against the euro in recent sessions ahead of a vote later this month which could force the SNB to increase its gold reserves, a move which could restrict its ability to cap the value of the franc against the euro.
The Australian, New Zealand and Canadian dollars were broadly weaker, with AUD/USD retreating 0.85% to 0.8643 and NZD/USD down 0.69% to 0.7867, while USD/CAD added 0.27% to 1.1329.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was steady at 87.65.
Later in the day, the U.S. was to release data on building permits and housing starts. In addition, the Federal Reserve was to publish the minutes of its October meeting.