Investing.com - The Japanese yen gained slightly in Asia on Wednesday after trade data showed a better than expected gain in exports and a less sharp drop in imports - with investors looking ahead to Federal Reserve minutes later in the day.
USD/JPY changed hands at 124.38, down 0.02%, while AUD/USD traded at 0.7338, down 0.07%.
Japan's trade balance for July showed a deficit of ¥268 billion, wider than the ¥57 billion deficit seen. But exports made a surprise 7.6% gain in the month, year-on-year, compared to an expected 5.5% gain, while imports dropped 3.2%, less than the 7.9% fall seen.
The US dollar index, which tracks the greenback against a basket of six major rivals, rose to 97.06, up 0.08%.
Overnight, the dollar was higher against a basket of major currencies on Tuesday, after data showing that U.S. housing starts rose to an almost eight-year high in July, while the pound was boosted by expectations for higher interest rates.
The Commerce Department reported that housing starts rose 0.2% to an annual pace of 1.21 million units, the highest level since October 2007.
It was the fourth straight month that housing starts remained above a one million-unit rate.
Building permits fell 16.3% in July, but that was after three consecutive months of strong gains.
The encouraging data came as investors were looking ahead to Wednesday’s minutes of the Federal Reserve’s July meeting, which it was hoped would provide more clarity on its plans to hike short-term interest rates for the first time since 2006.
Hours before the Fed minutes are made public on Wednesday afternoon, the U.S. Labor Department's Bureau of Labor Statistics will issue its Consumer Price Index (CPI) report for July. Last week, Fed vice chairman Stanley Fischer expressed concern with the lack of inflation in the U.S. economy due to slower than expected growth. The Fed would like to see long-term inflation move toward its targeted goal of 2% before it starts to raise interest rates.
For the July report, consensus forecasts expect the CPI to tick up 0.2% after solid monthly gains of 0.3% and 0.4% in June and May respectively. During its last monthly report, the CPI moved steadily upward in spite of record monthly declines in hospital services by 1.1%. The headline CPI also received a boost in June from a rise in energy prices, which increased by 1.7% for the month.
Energy prices, however, since late-June have crashed approximately 25% amid record oversupply on the global markets. The massive decline in crude prices has caused economists to temper their expectations for further gains in inflation. BNP Paribas (PARIS:PARIS:PARIS:BNPP), for instance, has lowered its inflation forecast for January, 2016 to around 1.75% from above 2% in mid-June.