Asia FX gains some ground as dollar inches lower ahead of CPI data

Investing.com-- Most Asian currencies rose slightly on Wednesday, retaking some ground against a weaker dollar as markets awaited more cues on interest rates from key U.S. inflation data due later in the day. 

Traders also grew more confident that the Federal Reserve will not hike interest rates further in 2024, following comments from Chair Jerome Powell on Tuesday. This notion sparked some weakness in the dollar, even as factory inflation data for April surprised to the upside. 

Still, most regional currencies were nursing steep losses against the dollar in recent months, as traders largely priced out most expectations of interest rate cuts in 2024. 

Dollar steady as CPI data approaches 

The dollar index and dollar index futures both fell slightly in Asian trade on Wednesday, extending overnight losses even as producer price index data surprised to the upside.

Comments from the Fed’s Powell, specifically that monetary policy was currently tight enough to eventually bring down inflation, was a key driver of the dollar’s decline. 

But Powell also warned that the central bank was losing confidence that inflation was easing quickly, and that price pressures could take longer to reach the bank’s 2% annual target.

His comments, plus the strong PPI reading, put markets on guard over a potentially hotter-than-expected consumer price index reading for April, due later in the day. Any signs of sticky inflation are likely to further diminish expectations of rate cuts in 2024, presenting a strong outlook for the dollar and more headwinds for Asian markets. 

Asia FX clocks mild gains

Overnight weakness in the dollar afforded some strength to Asian currencies on Wednesday, despite a string of weak domestic factors.

The Chinese yuan’s USDCNY pair fell 0.1% even as the U.S. imposed strict tariffs against key Chinese sectors such as electric vehicle batteries and semiconductors.

The move is expected to attract retaliation by Beijing and could reignite a heated trade war between the world’s two biggest economies, presenting a weak outlook for China. 

The Japanese yen’s USDJPY pair fell slightly but remained well above the 156 yen level, as markets remained on guard over any more currency market intervention by the government. The government was last seen intervening around 160 yen, which a bulk of traders said was the new line in the sand. 

Focus this week is also on first-quarter Japanese gross domestic product data, due on Thursday. 

The Australian dollar’s AUDUSD pair rose 0.4%, even as wage growth data for the first quarter read weaker than expected.

The Indian rupee’s USDINR pair moved little after falling from near record highs on Tuesday, while the Singapore dollar’s USDSGD pair fell 0.1%. 

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201)

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: