©Reuters.
Investing.com– Most Asian currencies weakened on Tuesday, while the dollar strengthened as markets fell ahead of key U.S. inflation data expected to impact interest rate trends.
The inflation data comes after a chorus of Federal Reserve officials warned that the central bank was in no rush to start cutting interest rates in 2024, a trend that bodes well for the dollar and bad for low-lying currencies. high return and high risk.
A week-long trading holiday in China and Hong Kong kept Asian trade volumes subdued. But offshore trade has declined slightly.
The Japanese yen approaches the 150 level on dovish signals from the BOJ
The euro has been among the worst-performing regional units in recent sessions, losing 0.1% on Tuesday and trading at 149.53, a nearly three-month low and on the verge of surpassing the 150 level, which heralds further losses for the yen.
The yen’s losses came mainly after a senior Bank of Japan official signaled that even when the bank starts raising interest rates this year, it is unlikely to raise rates aggressively. This scenario offers little relief to the yen, which has been pressured primarily by a widening gap between local and U.S. interest rates, a trend that is worsened by the prospect of higher U.S. rates for a longer period.
Data due out this Friday is expected to show limited improvement in growth, following an unexpected contraction in the third quarter.
Broader Asian currencies trended lower. The stock lost 0.3% and traded near a three-month low. A private survey showed Australia rebounded to 10-month highs in early February amid growing optimism about easing inflation and an end to interest rate rises.
The result was flat, while the decline was 0.1%.
Inflation fell after data on Monday showed India’s inflation (CPI) fell as expected in January but remained well above the Reserve Bank of India’s 4% annual target.
The dollar is rising, signals on the consumer price index are awaited for indications on a rate cut
The and rose 0.1% each in Asian trade, remaining within sight of a recent three-month high as traders looked to subsequent interest rate cuts this year.
Inflation is expected to have eased in January but remained well above the Fed’s 2% annual target, giving the bank little impetus to start cutting interest rates early.
The dollar surged in late January as traders began dramatically scaling back bets that the Fed would begin cutting interest rates in March and May. Markets have shown that the probability of a 25 basis point cut in June is only 45.4%.