Investing.com — Most Asian currencies weakened on Thursday, while the dollar rose above two-week highs, amid caution ahead of more key signals on U.S. inflation and interest rates in the coming days.
Regional currencies were still reeling from a series of hawkish signals from the Federal Reserve, while officials warned they needed much more confidence that inflation was easing. Some officials also raised the possibility of more rate hikes if inflation remained persistent.
Dollar optimistic as GDP increases, inflation rates loom
The and rose slightly in Asian trading, posting strong overnight gains and reaching their highest levels since mid-May.
Traders largely remained focused on the dollar amid growing belief that the Fed will not cut rates anytime soon.
A revised first-quarter reading is expected later on Thursday and is expected to show continued resilience in the US economy. The strong economy gives the Fed more room to keep interest rates high for longer.
But the main focus this week is the numbers, the Fed’s favorite inflation gauge. The inflation reading, which will take place on Friday, is widely expected to show inflation remaining stable through April.
Several Fed officials will also speak in the coming days.
The Japanese yen is faltering, inflation data was expected
The Japanese yen pair fell slightly on Thursday but remained close to recent highs amid continued yen weakness.
But further yen weakness was hampered by the possibility of more government intervention after the government intervened in currency markets in early May. Reaching 160 USD/JPY had triggered the latest intervention.
The focus was now entirely on next Friday, for more signals about the Japanese economy. Any sign of rising inflation could mean some relief for the yen.
Broader Asian currencies remained weak. The Chinese yuan pair weakened slightly after the People’s Bank of China allowed the currency to weaken to a six-month low this week, amid growing pressure from concerns about a sluggish Chinese economy.
from China is expected on Friday.
The Australian dollar pair traded sideways, receiving little support from stronger-than-expected inflation on Wednesday.
The Singapore dollar pair rose 0.1%, while the South Korean won pair rose 0.5%.
The Indian rupee pair rose slightly and remained close to recent record highs.
