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The dollar succumbed to profit-taking in Asian trade on Wednesday and Asian shares drifted lower, though moves were small after US retail sales data reinforced expectations that the US Federal Reserve will soon pare its stimulus programme.
The dollar bought 98.06 yen, down about 0.2% and moving back toward a seven-week low of 95.810 hit last week as investors locked in gains its sharp rise over the last two days.
"The dollar looks firm on the whole but it is capped by Japanese exporters' offers. Flows are limited and there's no follow-through buying in Asia," said Takahiro Suzuki, vice- president of forex at Nomura Securities.
Against a basket of major currencies, the dollar dipped slightly.
US retail sales excluding cars, gasoline and building materials rose 0.5% in July, the largest increase since December, reinforcing expectations the US Federal Reserve could soon cut back quantitative easing.
Yields on benchmark US 10-year Treasuries inched down in Asia after rising to their highest in nearly two years on Tuesday, as investors prepared for a tapering of the Fed's $85 billion-a-month bond buying, perhaps as soon as September.
Atlanta Fed President Dennis Lockhart said it was too early to detail plans for a tapering, but did not rule out the possibility of it starting next month. His suggestion it would neither be sudden or drastic boosted sentiment in US stock markets that carried into Asian trade.
MSCI's broadest index of Asia-Pacific shares outside Japan was slightly lower, while Japan's benchmark Nikkei stock average erased early gains in line with a stronger yen, shedding 0.7%. The Korea Composite Stock Price Index (KOSPI) edged up.
European indicators also painted a brighter picture. Germany's ZEW economic sentiment survey was upbeat and euro zone industrial output rose, while UK house prices increased at their fastest pace in seven years.
"The US and European data offered evidence of an improving global economy, although they were not enough to provide a clear direction for the market, it will be enough to give it a push," said Ko Seung-hee, a market analyst at SK Securities in Seoul.
Data due on Wednesday is expected to show that in the June quarter the euro zone economy moved out of its longest recession, eking out growth of 0.2%.
In commodities markets, copper edged down to$7,273.25 a tonne. Gold wavered between positive and negative territory after slipping on the US retail sales data and was last at $1,322.51 per ounce.
Brent crude prices slipped 0.5% to $109.27 a barrel.
The Hong Kong Exchange suspended morning trade on Wednesday as Typhoon Utor approached.
