Investing.com — Most Asian currencies moved little on Tuesday, tracking a steady dollar, while traders remained largely focused on upcoming U.S. inflation data that will likely play a role in the interest rate outlook.
The Japanese yen was also a focus as the currency’s continued weakness made traders wary of any further government intervention.
Most regional currencies posted recent losses against the dollar as traders largely continued to favor the greenback while waiting for more signals on U.S. interest rates.
Japanese Yen awaits intervention while USDJPY crosses 156
The yen pair, which is inversely representative of the currency’s strength, rose 0.1% on Tuesday to trade well above 156 yen.
The pair had recovered much of the losses they suffered earlier in May, when the government intervened in the currency markets on two separate occasions.
While traders now saw the 160 yen as the new frontier for government intervention, the rapid rise of the USDJPY despite the threat of intervention led to fears that the government could intervene sooner.
Japanese data showed factory inflation remained largely subdued in April, suggesting there is little inflationary pressure on the Bank of Japan to maintain tightening policies.
Chinese yuan inches lower due to jitters on the real estate market
The Chinese yuan pair rose 0.1% as sentiment towards China deteriorated after another major real estate developer – in this case Agile Group Holdings Ltd (HK:) – defaulted on its bond payments.
The default largely offset optimism about improving inflation in China, as well as Beijing’s recent unveiling of plans for a massive bond issuance worth 1 trillion yuan ($138 billion).
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A prolonged slump in the property market has been a major point of pressure on China’s economy, despite repeated attempts by Beijing to support the sector. A slew of major Chinese cities have eased restrictions on home buying in the past two weeks.
Dollar stable with PPI, CPI data available
The and rose slightly in Asian trading as traders continued to favor the dollar in coming days ahead of inflation figures.
the data will come out later on Tuesday, with the more closely watched readings coming later on Wednesday. Both measures are likely to play a role in the outlook for US interest rates, with any signs of persistent US inflation providing more headwinds for Asian currencies.
Most regional units were muted on Tuesday. The Australian dollar pair fell 0.1%, while the South Korean won and Singapore dollar rose 0.2% and 0.1% respectively.
The Indian rupee pair remained close to record highs as data on Monday showed the Indian rupee held steady in April.
