Investing.com – Most Asian currencies moved little on Tuesday, while the dollar rose in anticipation of key inflation data that is likely to influence U.S. interest rate expectations.
Most regional currencies suffered some losses over the past week as risk appetite declined due to concerns about deteriorating global economic conditions.
But expectations of a U.S. interest rate cut helped limit overall losses and halted the dollar’s advance. But the dollar has seen some bids this week, amid positioning ahead of Wednesday’s inflation reading.
Dollar advances as CPI data, Fed meeting loom
Crude oil and gold prices rose about 0.1% in Asian trading, after achieving strong gains on Monday.
Traders favored the dollar as risk appetite deteriorated last week, while anticipation of key inflation data, due on Wednesday, helped spur inflows into the greenback.
Wednesday’s reading is expected to show inflation slowed further in August. It also comes just a week before a monetary policy meeting, where the central bank is widely expected to cut interest rates by 25 basis points.
The rate cuts are expected to hurt the dollar and spur some risk-driven flows into Asian markets. But the full extent of such a rotation will depend only on how much the Fed cuts rates this year.
The broader Asian currencies remained in a tight range. The Japanese yen was trading around 143.22 yen, after falling sharply last week amid increased demand for the safe haven yen.
The Australian dollar pair fell slightly after some weak economic readings from the country. A private survey showed that consumer confidence deteriorated in early September and remained close to the lowest levels seen during the Covid-19 pandemic in 2020, amid growing concerns about an economic slowdown.
The South Korean won rose 0.2%, while the Singapore dollar was flat. The Indian rupee was also trading sideways, but within sight of record highs.
Chinese yuan falls after mixed trade data
The Chinese yuan pair rose 0.1%, as the currency lost some ground after mixed trade data from the country.
China posted unexpected growth in August as the country’s industries largely shrugged off headwinds from trade restrictions imposed by the United States and its allies.
But China’s economy grew much less than expected, raising concerns about slowing domestic demand.
The yuan had already suffered some losses over the past week, following a series of disappointing Chinese economic readings.
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