Investing.com — Most Asian currencies fell on Thursday, while the dollar rose above two-week highs on caution ahead of more key signals on U.S. inflation and interest rates in the coming days.
Regional currencies are still reeling from a series of hawkish signals from the Federal Reserve, with officials warning that they need more confidence in falling inflation. Some officials have also indicated the possibility of raising interest rates further, if inflation remains steady.
The dollar is optimistic with the emergence of GDP and inflation numbers
The US dollar index rose slightly in Asian trading, extending its strong gains overnight and reaching its highest levels since mid-May.
Traders remained largely biased towards the dollar amid growing conviction that the Federal Reserve will not cut interest rates anytime soon.
A revised reading for the first quarter is due later on Thursday, and is expected to show continued resilience in the US economy. Strength in the economy gives the Fed more leverage to keep interest rates higher longer.
But the main point of focus this week is the data, the Fed's preferred measure of inflation. Friday's reading is widely expected to show inflation will remain steady through April.
Several Fed officials are also scheduled to speak in the coming days.
Japanese yen falters, inflation data awaits
The Japanese yen pair fell slightly on Thursday, but remained close to recent highs, amid continued weakness in the yen.
But further weakness in the yen's value has been hampered by the prospect of further government intervention, after the government was seen intervening in currency markets at the beginning of May. The USDJPY reaching 160 triggered the latest round of intervention.
The focus was now squarely on the next report, due on Friday, for more signals about the Japanese economy. Any signs of rising inflation could bring some relief to the yen.
Broader Asian currencies remained weak. The Chinese yuan pair weakened slightly after the People's Bank of China allowed the currency to fall to its lowest levels in six months this week, amid increasing pressure from concerns about the slowdown in the Chinese economy.
From China is scheduled for Friday.
The Australian dollar pair traded sideways, receiving little support from the stronger-than-expected inflation reading on Wednesday.
The Singapore dollar pair rose by 0.1%, while the South Korean won pair rose by 0.5%.
The Indian Rupee pair rose slightly and remained close to recent record highs.
