Investing.com – The dollar gave up early gains Tuesday in Asia with the yen on the rebound following a weakening overnight on expectations of continued monetary and fiscal stimulus in the wake of snap polls at the weekend.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.11% to 93.62.
Overnight, the dollar traded at three-month highs against the yen, as traders expected the Bank of Japan to continue its loose monetary policy measures after Japanese Prime Minister Shinzo Abe won a snap election for his party.
The positive start to the week for the greenback comes on the back of strong gains against the yen after prime minister Abe’s ruling Liberal Democratic party-led coalition won a two-thirds parliamentary “super majority” that gave him a fresh mandate to continue efforts to revive growth with a mix of ultra-loose monetary policy, spending and reform.
Also supporting the dollar was ongoing speculation concerning the appointment of the next head of the Federal Reserve after President Donald Trump said Monday that he would make his choice on Fed chair “very shortly”.
President Trump said last week, he is considering three main candidates to lead the Federal Reserve Board: Current Fed chair Janet Yellen, Federal Reserve Governor Jerome Powell, and Stanford University economist John Taylor.
The rise in the dollar weighed on the euro as the single currency fell to a nearly one-week amid ongoing political uncertainty in Spain.
The Canadian dollar came under pressure following wholesale inflation data that undershot expectations.