Asia FX steadies as dollar dips after Powell comments; yen intervention eyed By Investing.com
Most Asian currencies were steady on Wednesday, tracking some weakness in the dollar overnight after Federal Reserve Chairman Jerome Powell signaled progress toward lowering inflation.
The Japanese yen remained fragile and at its weakest level in 38 years, with the focus squarely on possible government intervention in the currency market.
Sentiment towards Asian markets remained weak after disappointing PMI data from China, while expectations of further signals on US interest rates kept traders on edge.
Dollar posts some losses, more signals on interest rates await
Gold and silver prices stabilized in Asian trading after each lost about 0.2% on Tuesday.
The dollar’s losses came after Powell signaled some progress in reducing inflation. U.S. Treasury yields also fell after Powell’s speech.
But losses in the dollar were limited, as Powell also warned that the Fed still needs more confidence to start cutting interest rates.
Powell’s remarks come ahead of other key signals on U.S. monetary policy and the economy this week. Federal Reserve officials are scheduled to speak at its June policy meeting, along with more speeches, on Wednesday.
The data is due out on Friday.
Japanese Yen Fragile as USD/JPY Surpasses 161; Focus on Intervention
The Japanese yen rose 0.1% to 161.63 yen, with continued weakness as verbal warnings of intervention from Japanese officials did little to support the currency.
The yen’s weakness this week was driven by a sharp downward revision to Japan’s first-quarter GDP data, which reinforced bets that a faltering economy will give the Bank of Japan little room to tighten monetary policy.
But traders remained cautious about any potential government intervention. The government last intervened in May when the USD/JPY pair breached the 160 level.
Traders expected the government to plan to intervene during the July 4 U.S. market holiday, when trading volumes are expected to be thin.
Chinese Yuan Weakens on Disappointing Services PMI
The Chinese Yuan pair rose slightly and remained at its highest level since November.
Weak PMI data added to pressure on the yuan. The reading came in weaker than expected for June, adding to concerns about slowing growth in the sector, which has been supporting the Chinese economy.
Uncertainty about the outlook for the Chinese economy has weighed on the value of the yuan in recent weeks.
Broader Asian currencies steadied after recent losses, although sentiment remained weak amid uncertainty over U.S. interest rates.
The Australian dollar rose 0.2% after data showed stronger-than-expected growth in May. Higher retail spending supports inflation expectations in Australia, suggesting higher interest rates.
The South Korean won rose 0.3%, while the Singapore dollar rose 0.1%.
The Indian Rupee pair saw little movement but remained close to its recent record highs.
