The yen edged lower on Wednesday, remaining under pressure as risk sentiment improved and safe haven demand eased, on relief over the first round of the French presidential election. The dollar edged up 0.2 percent to 111.30 yen. The greenback added to the hefty gains made on Tuesday, when it climbed 1.2 percent, the dollar’s biggest one-day rise against the yen in three months.
Reduced concerns over the French presidential elections, combined with strong new U.S. home sales data and optimism surrounding an expected tax reform announcement on Wednesday from U.S. President Donald Trump’s administration, helped lift the dollar against the yen.
In a sign of the global bullish sentiment, the Nasdaq Composite hit a record high on Tuesday, while the Dow Jones Industrial Average and S&P 500 brushed against recent peaks, bolstered by strong corporate earnings. Still, it remains to be see whether the dollar will see a sustained push higher against the yen, said Teppei Ino, analyst for Bank of Tokyo-Mitsubishi UFJ in Singapore.
“It’s too early to say that the dollar will keep trending higher and head above the peak it saw in March,” Ino said, referring to the dollar’s March 10 high of 115.51 yen. The focus will be on forthcoming U.S. economic data, especially after a softening in some recent indicators, he added.
The euro edged up 0.1 percent to $1.0938. On Tuesday, it hit a 5-1/2 month high of $1.0950 as traders digested centrist candidate Emmanuel Macron’s victory in the first round of France’s presidential election on Sunday.
In addition, three sources close to the ECB’s Governing Council told Reuters that with the fading of the threat of a run-off between two eurosceptic candidates in France, and with the economy on its best run in years, many rate setters see scope for sending a small signal in June towards reducing monetary stimulus.
Against the yen, the euro edged up 0.2 percent to 121.76 yen . The euro has gained 4.1 percent against the yen so far this week. The Canadian dollar took a breather, having taken a hit on Tuesday after the United States imposed duties on Canadian softwood.
The Canadian dollar stood at C$1.3572 per U.S. dollar, not very far from Tuesday’s low of C$1.3626 against the greenback, the loonie’s lowest level since February 2016.