Investing.com — Most Asian currencies weakened slightly Tuesday as the dollar recovered from recent losses ahead of a barrage of signals on interest rates, while the Japanese yen weakened further to the range last seen 38 years ago .
Regional currencies saw little support even as traders priced in a higher chance of a Federal Reserve rate cut in September. Anticipation of more signals from the Fed and the US labor market kept interest in risk-driven assets limited.
The Japanese Yen Weakens, the USDJPY Rises with Intervention in Focus
The Japanese yen lagged its Asian peers, while the pair, which measures the amount of yen needed to buy one dollar, rose 0.1% to 161.64 yen. The pair has hovered around its highest level since 1986.
The continued weakness of the yen led to continued speculation about possible government intervention in the currency markets. Japanese ministers said they remained vigilant about movements in the currency market, although the USDJPY pair traded comfortably above the 160 yen level that last prompted intervention in May.
Traders speculated that the government could be waiting for low market volumes during the July 4 Independence Day holiday to intervene.
Dollarsteadies, Powell, payrolls and Fed minutes waited
Trading in Asia was steady after recovering from recent losses on Monday, with more signals on the Fed and US interest rates this week.
will speak at a European Central Bank conference on Tuesday, with the conference taking place on Wednesday.
Key data for June will be released on Friday and is expected to provide further insight into the labor market, which is also a key consideration for the Fed as it cuts interest rates.
The dollar saw some weakness last week as traders increased their bets following a 25 basis point rate cut in September. But a slew of Fed officials insisted the central bank will need to have more confidence in cooling inflation before cutting rates.
The Australian dollar is falling while the RBA minutes are disappointing
The Australian dollar pair fell 0.4% on Tuesday after the Reserve Bank of Australia’s latest meeting gave no clear signals on interest rate hikes.
Although the minutes showed that policymakers had considered a rate hike in light of persistent inflation, they ultimately opted to keep rates stable.
ANZ analysts said this was “not smoking… to suggest that an August rate hike is the base case for the RBA,” and that they expected the bank to hold rates steady until a cut in February.
But UBS analysts argued that any sign of continued inflation would likely lead to a rate hike in August, pushing inflation higher.
Broader Asian currencies were largely muted. The Chinese yuan pair remained at a seven-month high, while the Singapore dollar pair rose slightly. The South Korean won pair rose 0.5% as June data cooled more than expected.
The Indian rupee pair has hovered around mid-83 levels and remained close to recent record highs.
