The dollar fell in Asia on Wednesday and the yen edged higher on safe haven demand as President Donald Trump dramatically fired FBI Director James Comey over alleged poor handling of sensitive investigations.
USD/JPY fell 0.17% to 113.81, while AUD/USD changed hands at 0.7354, up 0.16% after the Australian budget released on late Tuesday levied a tax on banks to help the government meet projected fiscal surplus targets and secure its triple-A sovereign credit rating.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, dipped 0.15% to 99.30.
Ahead, China reports consumer prices for April with a 1.1% gain seen year on year and producer prices expected up 6.9%.
Overnight, the dollar traded higher against a basket of major currencies on Tuesday, buoyed by an uptick in expectations that the Federal Reserve is poised to increase its benchmark rate in June.
The dollar is on track for a two-day win streak as investors' expectations for a June rate hike soared to the highest level on Tuesday amid a slew of comments from Federal Reserve officials.
Investors mulled over hawkish comments from Kansas City Fed President Esther George on Tuesday. George said the U.S. central bank should keep gradually raising short-term interest rates despite the recent slowdown in GDP and car sales.
U.S. Treasury yields continued to climb on rate hike expectations; the U.S. 10-Year hit a five-week high of 2.409, up 1.37%.
According to Investing.com's Fed rate monitor tool, 80% of traders expect the Federal Reserve to hike interest rates in June, compared to 63% in the previous week.
Investors considered the impact of newly elected French president Emmanuel Macron's plans to introduce a "Buy European Act," which would block companies from outside the European trading bloc from bidding for public contracts within the European Union.