Asia FX creeps higher as dollar weakens ahead of U.S. data deluge

investing.com:

Investing.com--  Most Asian currencies strengthened on Tuesday, while the dollar retreated from near three-month highs as investors trimmed some positions before a slew of key economic readings this week. 

Fears of higher U.S. interest rates spurred a six-week rally in the greenback, following strong inflation and jobs data and as the Federal Reserve hinted at more potential rate hikes this year. 

This trade weighed heavily on Asian currencies, with most regional units nursing steep losses for the year as the gap between risky and low-risk yields narrowed. Concerns over slowing economic growth in China also dented sentiment towards Asian markets, with promises of more stimulus measures offering little relief.

The dollar index and dollar index futures fell 0.2% each in Asian trade, with traders trimming some positions in the greenback before key economic readings from the country, due this week.

U.S. consumer confidence data is due later on Tuesday, while a revised reading on second-quarter gross domestic product is due on Wednesday. Readings on personal consumption expenditures (PCE)- the Fed’s preferred inflation gauge are due on Thursday, while nonfarm payrolls data for August is set to close out the week. 

Any signs of resilience in the U.S. economy- particularly in inflation and the jobs market- gives the Fed more impetus to keep raising interest rates, with Chair Jerome Powell having reiterated the message last week. Higher U.S. rates bode poorly for Asian markets.

Still, weakness in the dollar offered some near-term support to regional units. The Singapore dollar and South Korean won added 0.2% each on Tuesday, as did the Indian rupee. 

The yuan rose 0.1% on Tuesday, benefiting from a stronger daily midpoint fix by