Asian shares rise as traders await US inflation data
Asian shares nudged higher and the dollar was at a two-month low on Wednesday ahead of crucial U.S. inflation data that will help gauge whether the Federal Reserve is at the end of its aggressive rate hike policy. The Japanese yen strengthened against most major currencies and last fetched 139.43 against the dollar, its highest in a month.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.61% higher, while Australia's S&P/ASX 200 index rose 0.54%. Japan's Nikkei slid 1%. Economists polled by Reuters expect the consumer price index, scheduled to be released later on Wednesday, to have risen by 3.1% in June, after May's 4% increase.
That would be the lowest reading since March 2021. «This data point probably will not change the Fed's well-communicated intention to resume hiking at the July FOMC meeting,» Saxo Markets strategists said in a note. «However, if the core CPI decelerates as anticipated, investors may continue to keep the odds for September and November rate hikes low.» The core rate is expected to have dropped for a third month to 5% from 5.3%, though that is more than double the Fed's 2% target.
Markets are pricing in a 92% chance of a 25 basis point hike later this month, CME FedWatch tool showed, but remain doubtful of further hikes after that. Fed officials have indicated they expect to hike interest rates by at least another 50 basis points as they tackle persistent price pressures. China shares eased 0.14%, while Hong Kong's Hang Seng Index rose 0.5% in early trading.
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