Investing.com — Most Asian currencies fell on Tuesday, while the dollar rose slightly as traders awaited more signals on US interest rates from the Federal Reserve.
The Japanese yen continued to weaken, with the currency returning towards levels that attracted the latest currency market intervention by the government.
Declining optimism about China also weighed on markets, as traders waited to see how Beijing would roll out recently unveiled stimulus measures.
The Japanese yen is weak with USDJPY rising beyond 156
The pair, which measures the number of yen needed to buy one dollar, rose 0.2% on Tuesday and was trading well above the 156 level.
The pair has reversed most of the declines it made due to Japanese government intervention in the currency market to prop up the yen, and was now less than 4 yen away from levels that last attracted intervention earlier in May.
While this has kept the yen's losses measurable, the currency still faces further weakness in the face of continued pressure from US interest rates.
Uncertainty over the Bank of Japan's plans to begin tightening policy also led to a bleak outlook for the yen.
Dollar rises on more Fed signals
They rose about 0.1% each in Asian trading.
The dollar received support from further comments from Federal Reserve officials that the central bank still needs more convincing that inflation is falling, and that interest rates are likely to remain unchanged in the meantime.
This puts the Fed's late April meeting – scheduled for Wednesday – squarely in focus, for more information on the bank's stance on interest rates.
Several Fed officials – led by members of the bank's interest rate-setting committee – are also scheduled to speak in the coming days.
The prospect of higher US interest rates for a longer period bodes well for the dollar, and bad for risk-driven, high-yield currencies.
Broader Asian currencies fell on this idea. The Chinese yuan pair rose slightly, staying within sight of its highest level in six months. Optimism over China's stimulus measures also saw a decline in recent sessions, as traders awaited more positive economic readings.
The Australian dollar fell 0.2% even after the Reserve Bank meeting in May showed that policymakers had considered raising interest rates due to stable inflation. But they eventually settled on waiting.
The South Korean won pair rose by 0.4%, while the Singapore dollar pair rose by 0.1%.