Investing.com — Most Asian currencies rose slightly on Tuesday, while the dollar fell lower in holiday-thinned trading as markets awaited inflation data from several major economies this week.
The trading holidays in the US and Britain caused sluggish currency markets on Monday. But this caused some flows out of the dollar and into more risk-driven currencies, especially in Asia.
Australia, Japanese inflation figures available this week
The Australian dollar was among the day’s better performers, with the pair rising 0.3% even as data showed retail sales grew less than expected in April.
The reading created the possibility of a softer reading for the month, due on Wednesday.
The Japanese yen firmed slightly, with the pair down 0.1%. But the pair remained close to recent highs as the government’s apparent intervention in the currency market in early May provided only fleeting relief for the yen.
is due out this Friday and will likely play a role in the Bank of Japan’s interest rate outlook.
Dollar inches lower as PCE test looms
Shares fell about 0.1% each on Tuesday, weakening slightly in low-volume trading due to the Memorial Day holiday.
The focus this week is entirely on data, which are expected on Friday. This outcome is the Federal Reserve’s favorite inflation gauge and will likely play a role in the central bank’s outlook for rate cuts.
The PCE reading also comes as traders have been steadily pricing in expectations of Fed rate cuts this year. The traders shown now expect a higher probability of a hold in September, compared to previous, widespread bets on a cut.
The trend comes as a series of Fed officials warned that persistent inflation will prevent the central bank from easing policy prematurely. While Friday’s PCE reading is expected to show some cooling in price pressures, inflation is still expected to remain well above the Fed’s annual target of 2%.
This idea largely kept the broader Asian currencies under pressure. The Chinese yuan pair was flat on Tuesday, holding near a six-month high amid creeping doubts about a Chinese economic recovery.
Key Chinese data is also available this week.
The South Korean won pair fell 0.3%, while the Singapore dollar pair fell 0.2%.
The Indian rupee pair moved little but remained well below recent record highs.
