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The US dollar on Wednesday hit its highest level against the Japanese yen in nearly 38 years, and investor speculation was high that authorities in Japan could intervene to strengthen the country's currency, while major US stock indexes climbed.
Japan's top currency diplomat, Masato Kanda, said authorities were "seriously concerned and on high alert" about the yen's rapid decline.
The US dollar hit its strongest level since December 1986 against the yen, and it was last up 0.7 per cent at 160.697 yen. The euro also surged against the yen, rising to 171.79, its highest level since September 1992. It was last up 0.3 per cent at 171.625, according to a Reuters report.
"The market seems to be front-running itself with respect to BOJ (Bank of Japan) policy," said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey.
The yen has been hammered as investors flocked to dollar-based assets to take advantage of US interest rates which are 5.25 per cent to 5.5 per cent. That is much higher than Japanese rates, which have been raised this year to a range of zero to 0.1 per cent.The dollar index , which measures the greenback against a basket of currencies, gained 0.38 per cent to 106.07, with the euro down 0.34 per cent at $1.0677.
On Wall Street, shares of artificial intelligence chip leader Nvidia ended up 0.2 per cent, and shares of Amazon Inc jumped 3.9 per cent. The S&P 500 consumer discretionary index gained 2 per cent on the day.
The Dow Jones Industrial Average rose 15.64 points, or 0.04 per cent, to 39,127.80, the S&P 500 gained 8.60 points, or 0.16 per cent, to 5,477.90 and the Nasdaq Composite gained 87.50 points, or 0.49 per cent, to 17,805.16.
MSCI's gauge of stocks across the globe fell 0.04 points to 803.73.
European shares slipped, with investor focus among other things on French elections at the weekend. The STOXX 600 index fell 0.56 per cent.
US President Joe Biden and former President Donald Trump on Thursday head to the first of two debates ahead of their election rematch this November.
Investors also are seeking clues on US inflation and how soon the Federal Reserve may begin to cut interest rates.
Fed officials have urged patience on rate cuts. Fed Governor Michelle Bowman this week reiterated her view that holding the policy rate steady "for some time" would probably be enough to bring inflation under control.
Investors await Friday's release of the US personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure. Economists polled by Reuters expect PCE annual growth to ease to 2.6 per cent in May.
US Treasury yields rose as inflation in other countries priced up.
Australian consumer inflation accelerated to a six-month high in May.
The yield on benchmark US 10-year notes rose 9.1 basis points to 4.329 per cent, from 4.238 per cent late on Tuesday.
Brent crude futures climbed 24 cents to settle at $85.25 per barrel. US West Texas Intermediate crude futures gained 7 cents to settle at $80.90 a barrel.
Gold prices slipped to their lowest in more than two weeks. Spot gold was down 0.8 per cent, at $2,301.16 per ounce.