The dollar came under pressure in Asian trading on Thursday, after weak inflation data led investors to pare bets that the U.S. Federal Reserve will deliver an interest rate hike later in the session.
The outcome of the two-day Fed meeting continued to grip investors’ attention, particularly after a surprising 0.1 percent decline in U.S. consumer prices in August.
With the Fed firmly in focus, foreign exchange market participants took in stride Standard and Poor’s announcement, which came late on Wednesday in the Asian day, that it downgraded Japan’s credit rating by one notch to A+. The cut brings its rating in line with those of rivals Moody’s Investors Service and Fitch Ratings.
The dollar was trading at 120.54 yen, steady from late U.S. trade and holding above a low of 119.40 plumbed on Tuesday. The euro was also steady at 136.10 yen,.
The euro also bought $1.1291, down slightly, after euro zone inflation for August was revised to be weaker than initially thought, backing expectations of more bond-buying stimulus from the European Central Bank.