Investing.com – Most Asian currencies were little changed on Tuesday even as weakening demand for safe-haven assets sent the dollar slightly weaker, although expectations for new signals on the U.S. economy and interest rates kept traders biased towards the greenback.
Regional currencies continued to suffer sharp losses against the dollar last week as hawkish Federal Reserve cues and lower risk appetite pushed the greenback to more than five-month highs.
These factors are expected to remain strong in the coming week.
USDJPY hovers around 155, despite intervention fears, Bank of Japan waited
The Japanese yen was little changed on Tuesday but remained within sight of new 34-year highs above 155.
The yen’s weakness came despite rising speculation over when the Japanese government would intervene in currency markets. Traders expect USDJPY to reach 155 and trigger government intervention.
The yen’s fall came just days ahead of a meeting at which the central bank is expected to keep rates unchanged after raising them in March for the first time in 17 years. But the central bank could potentially take a more aggressive stance in supporting the Japanese currency.
Purchasing Managers’ Index data on Tuesday showed an improvement in Japan and the sector in April. The strength of the economy gives the Bank of Japan more room to express a hawkish stance.
Dollar treads water given GDP and PCE inflation
Asian trading was little changed on Tuesday, with the focus on upcoming inflation and economic growth figures.
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While the dollar has strengthened sharply in recent weeks, its performance has been dampened somewhat by easing concerns about escalating relations between Iran and Israel, which has undermined demand for a safe haven for the dollar.
Data due Thursday is expected to show how resilient the U.S. economy remained in the first quarter.
That will be followed by data on Friday, which is the Fed’s preferred gauge of inflation and is widely expected to factor into the central bank’s prospects for cutting interest rates.
The dollar remained close to more than five-month highs hit earlier in April as easing expectations of an imminent Fed interest rate cut led traders to pile into the greenback. This idea kept most Asian currencies under pressure.
The Australian dollar rose from a nearly five-month low on Tuesday, with focus on upcoming first-quarter consumer inflation data.
The Chinese Yuan pair was flat but remained near five-month highs, while the South Korean Won pair also hovered near five-month highs.
The Singapore dollar pair remained unchanged while the Indian rupee pair hovered below the record highs reached last week.