Investing.com - The yen held weaker on Wednesday in Asia as minutes from the Bank of Japan June board meeting suggested the impact of negative interest rates need to be assessed.
USD/JPY changed hands at 101.19, up 0.31%.
Earlier, in New Zealand, the labor cost index rose 1.8% in the second quarter year-on-year as expected.
NZD/USD traded at 0.7206, down 0.51%.
As well, the AIG services index in Australia for July jumped to 53.9, up from 51.3. AI Group Chief Executive Innes Willox said that as long as lower rates are passed on by banks, the decision by the Reserve Bank to reduce the cash rate Tuesday should provide a boost to business and consumer demand in services sub-sectors that are currently lagging.
AUD/USD changed hands at 0.7608, down 0.03%.
In China, the Caixin services PMI for July came in at 51.7, below the expected reading of 52.9.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose 0.13% to 95.14.
Overnight, USD/JPY fell sharply, sliding to near one-year lows, as Japan prime minister Shinzo Abe's cabinet approved a massive stimulus package on Tuesday in an apparent last-ditch effort to boost persistently low inflation.
Abe's economic stimulus plan was approved mere days after the Bank of Japan surprised markets by implementing only modest easing measures at a closely-watched meeting last week.
The $274 billion stimulus is one of the Japanese government's largest since the Financial Crisis and comes amid growing sentiment that Japan's economy will need to rely upon fiscal, not monetary policy in order to stave off deflation.
As part of the plan, the government will provide cash subsidies to as many as 22 million low-income residents, while providing support to communities in the southern region of the nation, which was hit by a devastating earthquake in the spring. Notably, the government will only provide approximately ¥7.5 trillion in direct spending, Reuters reported. The Dollar crashed by more than 3% against the Yen last Friday after the Bank of Japan rattled markets by only approving limited ETF purchases at a closely-watched meeting in Tokyo.
Elsewhere, the U.S. Bureau of Economic Analysis (BEA) said on Tuesday morning that Personal consumption expenditures (PCE) rose by 0.1% in June, slightly below consensus estimates of a 0.2% increase following a gain of 0.2% over the previous month. The gains are reflected by an uptick in spending for gas, electricity and healthcare services, which were partially offset by a reduction in spending in new vehicles. Over the last 12 months, the PCE Price Index has increased by 0.9% -- remaining unchanged from the year-over-year gains exhibited in May.
The Core PCE Index, which strips out volatile food and energy prices, inched up by 0.1% in June, in line with consensus estimates and below May's 0.2% monthly increase. On an annual basis, Core personal consumption expenditures are up by 1.6%, unchanged from May's level. At last week's Federal Open Market Committee (FOMC) July monetary policy meeting, the Committee said market-based measures of inflation continue to remain low, as the Core PCE index hovers below its long-term targeted objective of 2%.
While delivering a speech on monetary policy and the global economy in Beijing, Dallas Fed president Rob Kaplan urged the U.S. central bank to raise rates in a "gradual and patient manner," amid continuing challenges facing the U.S. economy. A day earlier, Kaplan told Bloomberg in a televised interview that a September rate hike is still on the table.
Hours later, Atlanta Fed president Dennis Lockhart said in an exclusive interview with CNBC that he didn't rule out the possibility for a rate hike from the FOMC when it meets next in September. Lockhart also emphasized that the Committee has been hesitant to sell bonds from its portfolio in recent months because it would create implicit tightening, placing upward pressure on interest rates.
Last week, the FOMC left its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50% for a fifth consecutive meeting.