Investing.com - The U.S. dollar extended losses against the yen in quiet trade on Wednesday, as concerns over political instability in Greece and new restrictions on China's debt markets continued to support demand for the safe-haven yen.
USD/JPY hit 118.66 during U.S. morning trade, the session low; the pair subsequently consolidated at 118.58, retreating 0.92%.
The pair was likely to find support at 117.69, the low of November 28 and resistance at 121.00, Tuesday's high.
The dollar came under pressure following a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week, a move which could trigger early elections if Prime Minister Antonis Samaras’ candidate is not chosen.
Markets were also spooked by a Chinese government decision to set new restrictions on collateral for short-term loans. The decision fuelled fears that China’s economy is slowing at a faster rate than anticipated.
But demand for the greenback looked likely to remain supported by the diverging monetary policy stance between the Federal Reserve and central banks in Japan and Europe.
Last week’s strong U.S. jobs report for November prompted investors to bring forward expectations for the first hike in interest rates to mid-2015 from September 2015 ahead of the report.
Investors were looking ahead to next week’s policy statement from the Fed amid speculation that policymakers could drop an assurance that interest rates will stay low for a "considerable time".
The yen was also higher against the euro, with EUR/JPY declining 0.48% to 147.34.