Investing.com — Most Asian currencies were little moved on Tuesday, while the dollar edged higher ahead of key inflation data that is likely to play a role in the outlook for U.S. interest rates.
Most regional currencies suffered some losses last week as risk appetite was dented by concerns about deteriorating global economic conditions.
But anticipation of US interest rate cuts helped limit overall losses while also slowing the dollar’s advance. But the dollar took some bids this week, amid positioning ahead of Wednesday’s inflation reading.
Dollar rises with CPI data, Fed meeting in sight
The and both rose about 0.1% in Asian trading after posting strong gains on Monday.
Traders favored the dollar as risk sentiment deteriorated last week, while expectations of key inflation data due on Wednesday also boosted flows into the dollar.
Inflation from Wednesday is expected to cool further in August. The reading also comes just a week ahead of , when the central bank is widely expected to cut rates by 25 basis points.
Lower interest rates are expected to put a dent in the dollar and stimulate some flows into risk-driven Asian markets. But the full extent of such a rotation will depend on how much the Fed cuts rates this year.
The broader Asian currencies remained within a tight range. The Japanese yen pair has been hovering around 143.22 yen after falling sharply last week on increased demand for yen safe havens.
The Australian dollar pair fell slightly after some weak economic data from the country. A private survey showed consumer confidence worsened in early September and remained near the lows of the 2020 COVID-19 pandemic, amid growing concerns about an economic slowdown.
The South Korean won pair rose 0.2%, while the Singapore dollar pair was flat. The Indian rupee pair also traded sideways but was in sight of record highs.
China’s yuan weakens after mixed trade data
The Chinese yuan pair rose 0.1%, with the currency losing some ground after mixed trading data from the country.
China’s grew unexpectedly in August as the country’s industries largely offset the headwinds of trade restrictions imposed by the US and its allies.
But China’s grew much less than expected, raising concerns about sluggish local demand.
The yuan already suffered some losses last week after a series of disappointing Chinese economic data.
