Investing.com – Most Asian currencies fell on Wednesday, while the dollar maintained some gains overnight after better-than-expected U.S. inflation data kept fears alive over longer-term higher interest rates.
It was an outlier, however, as it benefited from growing confidence that the Bank of Japan was set to raise interest rates soon. However, the yen’s gains remained capped by concerns about US rates.
The dollar is stable as the consumer price index beats expectations, more economically. tips on tap
The exchange rate fell slightly in Asian trade but held on to most of its overnight gains after a stronger-than-expected inflation reading.
The data showed inflation remained more resilient than expected, adding to concerns that the Federal Reserve will have little incentive to begin cutting interest rates.
However, markets continue to bet that the Fed will have enough reason to begin cutting rates by June, with a 25 basis point cut still possible, according to .
But the higher CPI reading potentially sets the stage for stronger inflation readings due later this week. US data for February will also be released on Thursday.
Firms dealing in Japanese yen watch Bank of Japan hike rates
The index rose 0.3% on Wednesday as signs of an impending wage hike in Japan fueled expectations that the Bank of Japan will soon raise interest rates.
Media reports showed Toyota Motor (NYSE:) Corp (TYO:), one of Japan’s largest employers, agreed with the union on a sharp increase in wages. Other employers appear to have followed suit.
Rising wages, coupled with recent robust inflation figures, give the Bank of Japan further incentive to end negative interest rates and yield curve control policies.
Reuters reported that the Bank of Japan is preparing to signal how it will handle bond purchases once it ends its ultra-dovish policy.
The Bank of Japan is set at 0.000% and is poised to raise interest rates either then or at its meeting in late April. Higher rates bode well for the yen, which has been hurt by rising US rates over the past two years.
Asian currencies generally moved in a flat to tame range. Added 0.1%, while both are marking time.
The fall was 0.1%, despite the People’s Bank of China setting a stronger-than-expected average. Attention was also focused on key national data due later in the day.
The market has stabilized after some losses in overnight trading.