Asia FX slips as dollar rebounds, peak Fed rates in sight
Investing.com-- Most Asian currencies fell on Wednesday as the dollar rebounded from 15-month lows, with recent U.S. data spurring more bets that the Federal Reserve was close to pausing its rate hike cycle.
The dollar index and dollar index futures rose about 0.1% each in Asian trade, extending an overnight rebound after data showed that U.S. retail sales rose less than expected in June.
The reading indicated that U.S. inflation was likely to ease further in the coming months, but cemented bets that the Fed will raise rates one last time in late-July before announcing a pause. The central bank is widely expected to raise rates by 25 basis points next week.
Still, overnight strength in the dollar pressured most Asian currencies, with the Japanese yen losing 0.3%, while the Australian dollar sank 0.4%.
Concerns over slowing economic growth in China also kept sentiment towards Asia largely negative.
The Chinese yuan was among the worst performing Asian currencies on Wednesday, down 0.4% and once again crossing the 7.2 mark against the dollar.
The currency logged steep losses this week after data showed that a Chinese economic recovery slowed substantially in the second quarter, denting sentiment over Asia’s largest economy.
While the weak economic readings pushed up expectations for more stimulus measures from Beijing, any increases in local liquidity conditions are likely to be negative for the yuan.
Concerns over China also spilled over into other Asian currencies with exposure to the country. The South Korean won fell 0.1%, while the Taiwan dollar and Philippine peso lost 0.4% each.
The New Zealand dollar was among the few gainers for the day, rising 0.2% after data showed that consumer price index inflation in the
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