Investing.com - The yen remained stronger against the dollar on Wednesday despite a slight recovery in oil prices as investors remained cautious in the wake of recent declines in oil and a steep drop on Wall Street.
USD/JPY was down 0.58% to 119.25 from Tuesday’s close at 119.96.
The yen had fallen to six-week lows against the dollar on Friday after a shock decision by the Bank of Japan to adopt negative interest rates as part of an ongoing effort to combat deflation.
Oil prices rose on Wednesday after ending the previous session sharply lower amid fears that a massive supply glut is coinciding with slowing global growth.
The dollar was also lower against the Swiss franc, which tends to be bought by investors in times of risk aversion, with USD/CHF down 0.24% to 1.0163.
The low-yielding euro was little changed against the dollar, with EUR/USD at 1.0925.
In the euro zone, data on Wednesday showed that business activity slowed to a four month low in January, adding to pressure on the European Central Bank to take fresh measures to shore up growth.
The composite euro area PMI, which measures manufacturing and service sector activity, slid to 53.6 in January from 54.3 in December.
Another report showed that retail sales in the region rebounded in December, boosted by Christmas shopping.
The pound rose to three week highs against the dollar boosted by data showing that the dominant U.K. service sector posted another solid rise in output in January, getting 2016 off to a strong start.
GBP/USD touched highs of 1.4486, the most since January 12.
The currencies of commodity producing countries were boosted by the rise in oil prices.
AUD/USD was up 0.31% to 0.7059, recovering after steep falls in the previous session, while USD/CAD slid 0.38% to 1.4002.
The New Zealand dollar jumped after better-than-expected labor market data was seen as pushing back the chances for a rate cut by the country's central bank.
New Zealand’s unemployment rate unexpectedly fell to 5.3% from 6% in three months to December. It was the lowest reading since March 2009.
NZD/USD advanced 1.2% to 0.6591, off overnight lows of 0.6508.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.22% to 98.65 as investors looked ahead to U.S. data on private sector hiring and service sector activity later in the day.
Markets were also beginning to turn their attention to Friday’s U.S. nonfarm payrolls report for possible indications on the path of U.S. interest rates hikes this year.