Asia FX firms as dollar eases; yen buoyed by sticky inflation
Investing.com-- Most Asian currencies rose slightly on Tuesday, taking some relief from mild declines in the dollar before a key inflation reading which is set to offer more cues on U.S. interest rates this week.
Still, gains across regional currencies were limited, with most units remaining squarely within a trading range established over the past two months. The greenback also remained in sight of a recent three-month high.
The Japanese yen was among the better performers for the day, rising 0.2% from its weakest level in over three months after consumer price index inflation read slightly higher than expected for January.
While the reading still showed a retreat in inflation, it factored into growing expectations that the Bank of Japan will raise interest rates by as soon as April.
The BOJ is widely expected to end its yield curve control and negative interest rate policies this year, with sticky inflation potentially giving the central bank more impetus to do so sooner than later.
But worsening economic conditions in Japan may potentially delay the BOJ’s plans, especially as the economy unexpectedly fell into recession in the fourth quarter.
Broader Asian currencies were mildly higher for the day, with a string of regional economic readings on tap. The Australian dollar rose 0.1% before a monthly CPI inflation reading, due on Wednesday.
The New Zealand dollar fell 0.2% before a Reserve Bank meeting where the RBNZ is widely expected to hold interest rates and flag more potential hikes, amid sticky inflation.
The Chinese yuan was flat before a string of key purchasing managers index (PMI) readings due this Friday, which are expected to shed more light on Asia’s biggest economy.
The South Korean won and Singapore
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