Investing.com – Most Asian currencies fell on Friday and the dollar hit a more than one-week high as better-than-expected U.S. inflation data fueled concerns about any hawkish signals from next week’s Federal Reserve meeting. .
Markets were also jittery ahead of central bank meetings in Japan and Australia next week, which are expected to potentially provide more hawkish signals to currency markets.
Dollar hits more than one-week high as persistent inflation attracts Fed attention
In Asian trading, indices rose 0.1% to sit comfortably above 103 after February data came in above expectations.
The data follows stronger-than-expected data released earlier this week that also showed inflation moving further away from the Federal Reserve’s annual 2% target.
The higher inflation readings were recorded just ahead of next week, when the central bank is expected to keep interest rates unchanged.
But the Fed could now potentially propose a more aggressive stance on rates, given that it has repeatedly signaled that any rate cut in 2024 would be largely dictated by the trajectory of inflation.
Traders lowered their expectations for a June interest rate cut and raised expectations for a rate freeze, according to the instrument.
The prospect of higher interest rates over a longer period weighed on Asian currencies overall.
Yen stabilizes, Bank of Japan reversal in focus
It was little changed on Friday and was on track to lose 0.8% this week amid growing speculation about what’s ahead next week.
The central bank is expected to end its policy of controlling negative interest rates and the yield curve in the coming months, with analysts divided over a decision to be made in March or April.
The Bank of Japan could potentially raise interest rates for the first time in nearly 17 years next week, especially as Japanese inflation remained stable in February and recent Japanese wage talks point to a sharp rise in interest rates in 2024. Both factors are key factors for the Bank of Japan to tighten policy. policy.
Among other Asian stocks, shares fell 0.2% and are expected to remain hawkish next week.
The fall was 0.1% as the People’s Bank of China left medium-term lending rates unchanged, signaling no changes next week. However, weak data indicated continued pressure on the Chinese economy.
The stock fell 0.5%, facing pressure from a stronger US dollar, while falling 0.1%.
The pair survived sharp losses on Thursday and was trading at 82.9 per dollar in morning trade.