Investing.com – Most Asian currencies firmed slightly on Tuesday, while the dollar fell amid holiday trading as markets await inflation data from several major economies this week.
Trading holidays in the US and UK led to sluggish currency markets on Monday. But that has led to some flight out of the dollar and into riskier currencies, especially in Asia.
Inflation data from Australia and Japan will be published this week.
The Australian dollar was the best performer of the day, rising 0.3%, despite data showing retail sales rose less than expected in April.
The data raises the possibility of softer monthly numbers due on Wednesday.
The Japanese yen strengthened slightly, the pair fell 0.1%. But the pair remained close to recent highs as the government’s apparent intervention in the foreign exchange market in early May brought only momentary relief to the yen.
The debt is due out this Friday and will likely impact the Bank of Japan’s interest rate outlook.
Dollar falls inches as PCE test approaches
Yi indexes fell about 0.1% on Tuesday, weakening slightly amid light trading volumes due to the Memorial Day holiday.
This week’s focus will be on the data, which will be released on Friday. The reading is the Federal Reserve’s preferred measure of inflation and will likely be factored into the central bank’s forecast for interest rate cuts.
The PCE figures also come as traders gradually shrug off expectations of a Fed rate cut this year. Traders surveyed now expect a better chance of rates holding in September compared with previously widespread bets on a rate cut.
The trend comes as several Fed officials warned that persistent inflation would prevent the central bank from easing policy early. While Friday’s PCE readings are expected to show some easing in price pressures, inflation is expected to remain well above the Fed’s annual target of 2%.
This idea kept Asian currencies largely depressed. The Chinese yuan pair remained unchanged on Tuesday and remained close to six-month highs amid growing doubts about China’s economic recovery.
Key data for China will also be available this week.
The South Korean won fell 0.3% and the Singapore dollar fell 0.2%.
The Indian Rupee pair remained little changed but remained well below recent record highs.