© Reuters
Investing.com – Most Asian currencies rose slightly on Tuesday as markets await more clues about US monetary policy this week, while the Australian dollar fell after the Reserve Bank held interest rates steady, sidestepping some expectations of a hike.
Most regional currencies have seen a slight rebound from their recent lows this week, after a weaker-than-expected Fed reading made markets wonder how much higher interest rates could be.
Weakness in the US also raised questions about how far the economic rally should be for the Fed to continue raising interest rates.
But the gains in Asian currencies were limited amid expectations that , while many other signals about US monetary policy were due this week as well.
The dollar moved slightly in Asian trade, with the US market holiday offering few clues. Both moved less than 0.1% each on Tuesday.
The focus this week is on Wednesday, as well as key data scheduled for Friday.
It added 0.1%, bouncing slightly from its recent seven-month low, while hovering near a four-month high.
The Australian dollar is falling as the Reserve Bank of Australia keeps interest rates steady
It fell 0.3% after the Reserve Bank of Australia on Tuesday, beating expectations from a narrow majority of analysts that the bank would raise interest rates for the third month in a row.
But losses in the Australian currency were limited, as the Reserve Bank of Australia continues to raise the possibility of a rate hike in the near future. The decision to pause in July was largely driven by the need to assess the impact of sharp monetary policy tightening on the economy.
The move comes as headline declines occurred during the month of May. But core inflation remains high, which gives the bank more impetus to continue raising interest rates further.
The Japanese Yen stabilized amid speculation of intervention
The pair moved slightly on Tuesday, hovering around seven-month lows as markets continued to monitor any potential government intervention in the currency markets.
Recent sharp declines in the Japanese yen have Japanese ministers offering more verbal warnings about possible intervention. The country’s top currency diplomat, Masato Kanda, said the authorities are in close contact with US officials on currency markets.
The yen was about to break above the 145 level against the dollar, which analysts say will attract some government intervention.
The government last intervened in the currency markets in October 2022, when the yen hit a more than 30-year low of 150 against the dollar.
