Investing.com — Most Asian currencies moved little on Tuesday even as weakening safe-haven demand weakened the dollar somewhat, although expectations of more signals on the U.S. economy and interest rates left traders favoring the greenback.
Regional currencies continued to post steep losses against the dollar last week as hawkish signals from the Federal Reserve and declining risk appetite pushed the greenback to a five-month high.
These factors are expected to continue to play a role in the coming week.
USDJPY hovers around 155 despite intervention fears, BOJ waited
The Japanese yen pair moved little on Tuesday, staying just within sight of new 34-year highs above the 155 level.
The yen’s weakness came despite increasing speculation about when the Japanese government will intervene in the currency markets. Traders are looking for USDJPY to reach the 155 level and trigger government intervention.
The yen’s decline comes just days before a meeting where the central bank is widely expected to leave interest rates unchanged after raising them for the first time in 17 years in March. But the central bank could potentially take a more aggressive stance to support the Japanese currency.
Purchasing Managers Index data showed improvements in Japan and the sector through April on Tuesday. The strength of the economy gives the BOJ more room to take an aggressive stance.
Dollar Treads Water on GDP, PCE Inflation Lurking
The and moved little in Asian trading on Tuesday, with the focus squarely on upcoming inflation and economic growth figures.
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Although the dollar has appreciated strongly in recent weeks, momentum has been somewhat blunted by waning fears of an escalation between Iran and Israel, undermining safe-haven demand for the dollar.
The figures due Thursday are expected to show how resilient the US economy has remained in the first quarter.
This will be followed by data on Friday, which is the Fed’s favorite inflation gauge and is widely expected to play a role in the central bank’s outlook for rate cuts.
The dollar remained close to a five-month high reached earlier in April as declining expectations of early Fed rate cuts prompted traders to rush into the greenback. This idea kept most Asian currencies under pressure.
The Australian dollar pair rose from a near five-month low on Tuesday, with focus shifting to an upcoming first-quarter gauge on consumer inflation.
The Chinese yuan pair remained near a five-month high, while the South Korean won pair also hovered close to a five-month high.
The Singapore dollar pair was flat, while the Indian rupee pair hovered below last week’s record highs.
