Asia FX weakens, dollar edges up with CPI data in sight

Investing.com-- Most Asian currencies weakened on Tuesday, while the dollar firmed as markets hunkered down before key U.S. inflation data that is widely expected to factor into the path of interest rates. 

The inflation data comes after a chorus of Federal Reserve officials warned that the central bank was in no hurry to begin trimming interest rates in 2024- a trend that bodes well for the dollar and poorly for risk-heavy, high-yield currencies.

A week-long trading holiday in China and Hong Kong kept Asian trading volumes muted. But the Chinese yuan fell slightly in offshore trade. 

Japanese yen nears 150 level on dovish BOJ cues

The Japanese yen was among the worst-performing regional units in recent sessions, losing 0.1% on Tuesday and trading at 149.53- a near three-month low and just a hair away from breaking above the 150 level, which heralds more losses in the yen.

Losses in the yen came chiefly after a top Bank of Japan official signaled that even when the bank begins raising interest rates this year, it was unlikely to raise rates aggressively. This scenario presents little relief to the yen, which was pressured chiefly by a widening gulf between local and U.S. interest rates- a trend that is worsened by the prospect of higher-for-longer U.S. rates. 

Fourth-quarter Japanese GDP data due this Friday is expected to show a limited improvement in growth, after an unexpected contraction in the third quarter.

Broader Asian currencies trended lower. The Australian dollar lost 0.3% and traded close to a three-month low. A private survey showed that Australian consumer sentiment rebounded to a 10-month high in early-February, amid increased optimism over easing inflation and no more interest rate hikes. 

The South Korean won was flat, while the Singapore dollar shed 0.1%. 

The Indian rupee tread water after data on Monday showed Indian consumer price index (CPI) inflation eased as expected in January, but remained well above the Reserve Bank of India’s 4% annual target.

Dollar edges higher, CPI data awaited for rate cut cues 

The dollar index and dollar index futures rose 0.1% each in Asian trade, and remained within sight of a recent three-month high as traders looked to later interest rate cuts this year.

CPI data is expected to show inflation eased in January, but remained well above the Fed’s 2% annual target- which gives the bank little impetus to begin cutting interest rates early.

The dollar had shot up in late-January as traders began sharply scaling back bets that the Fed will begin cutting interest rates in March and May. The CME Fedwatch tool showed markets pricing in an only 45.4% chance for a 25 basis point cut in June. 

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. 76.3% 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) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

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: