Investing.com-- Most Asian currencies moved little on Tuesday, while the dollar steadied close to a six-month peak as investors hunkered down before data showing a potential rise in U.S. inflation.
Markets were also holding out for more economic cues from China, as recent data showed some improvement in inflation and loan activity through August. But the overall outlook for the Chinese economy still deteriorated, with a Reuters poll now forecasting 2023 GDP growth of 5%- in line with China’s official forecast, but lower than forecasts from investment banks.
The yuan remained resilient through this, with the Chinese currency rebounding from a near 10-month low this week as the People’s Bank rolled out a series of strong daily midpoints. The bank was also seen intervening in currency markets to buoy the yuan.
The Indian rupee fell slightly after rebounding from near record lows on Monday. Markets were also awaiting consumer inflation readings from the country, which are expected to show continued resilience in prices through August.
Japanese yen rebounds amid hawkish BOJ talk
The Japanese yen steadied on Tuesday after rebounding sharply from a near 10-month low overnight. The currency was boosted chiefly by comments from Bank of Japan Governor Kazuo Ueda, who said that an end to the BOJ’s negative interest rates could be close.
Ueda said that the BOJ’s 2% inflation target was within sight, which would give the bank more impetus to begin raising rates after nearly a decade of ultra-loose monetary policy.
But while such a scenario bodes well for the yen, the currency was still nursing steep losses for the year, hit chiefly by a widening gap between local and international interest rates.
Worsening risk sentiment and fears of a BOJ pivot also diminished the yen’s appeal for carry trade this year.
Dollar steady near 6-month high, CPI in focus
The dollar moved little in Asian trade on Tuesday, seeing some consolidation after racing to a near six-month peak in recent sessions.
Focus is squarely on U.S. consumer inflation data due on Wednesday, which is expected to set the tone for a Federal Reserve meeting next week. Inflation is expected to have risen at a faster pace in August from July.
Any signs of sticky inflation gives the Fed more headroom to either raise rates further, or keep them higher for longer. While the central bank is widely expected to keep rates on hold in September, it is also expected tountil at least mid-2025.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.