Investing.com — Most Asian currencies moved slightly on Tuesday, tracking a flat dollar, as traders remained largely focused on upcoming US inflation readings that are likely to weigh on interest rate expectations.
The Japanese yen was also a point of focus, as continued weakness in the currency put traders on alert for any further potential intervention by the government.
Most regional currencies suffered recent losses against the dollar, as traders remain largely biased towards the dollar before more signs emerge on US interest rates.
The Japanese Yen is under intervention watch while USDJPY exceeds the 156 level
The yen pair, which inversely represents the currency's strength, rose 0.1% on Tuesday and traded above 156 yen.
The pair has recovered the bulk of the losses incurred earlier in May, when the government was seen intervening in the currency markets on two separate occasions.
While traders now see 160 yen as the new line for government intervention, the rapid rise of USDJPY, despite the threat of intervention, has raised concerns that the government may intervene sooner.
Japanese data showed factory inflation remained largely subdued in April, suggesting there is little inflationary pressure on the Bank of Japan to continue tightening policy.
The Chinese yuan declines amid real estate market tensions
The Chinese yuan pair rose 0.1%, as sentiment towards China deteriorated after another major property developer – in this case Agile Group Holdings Ltd (HK:) – defaulted on its bonds.
The default was largely offset by some optimism about improving inflation in China, as well as Beijing's recent unveiling of plans to issue a massive trillion yuan ($138 billion) worth of bonds.
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The prolonged slump in the real estate market has been a major pressure point on the Chinese economy, despite repeated efforts by Beijing to support the sector. A large number of major Chinese cities have eased restrictions on home purchases in the past two weeks.
The dollar is steady with PPI and CPI data available
The US dollar rose slightly in Asian trading, as traders remained biased towards the dollar ahead of inflation readings in the coming days.
The data is due later on Tuesday, while the more closely watched reading is due later on Wednesday. Both readings are likely to take into account the outlook for US interest rates, with any signs of sticky US inflation representing further headwinds for Asian currencies.
Most of the regional units were silent on Tuesday. The Australian dollar pair fell 0.1%, while the South Korean won and the Singapore dollar rose 0.2% and 0.1%, respectively.
The Indian rupee pair remained close to its record highs as data on Monday showed that the Indian rupee remained steady in April.