Investing.com – Most Asian currencies weakened on Thursday, while the dollar hit a two-week high amid caution ahead of new key signals on U.S. inflation and interest rates in the coming days.
Regional currencies were still reeling from a string of aggressive signals from the Federal Reserve as officials warned they needed much more confidence that inflation was falling. Some officials also flagged the possibility of further rate hikes if inflation remains stable.
Dollar is optimistic amid GDP and inflation forecasts
And prices rose slightly in Asian trade, extending strong overnight gains to reach their highest levels since mid-May.
Traders remain biased towards the US dollar amid growing confidence that the Federal Reserve will not cut interest rates anytime soon.
Revised first-quarter data will be released later on Thursday and is expected to show the continued strength of the US economy. The strength of the economy gives the Fed more room to keep rates high for a long time.
But the focus this week is on data, the Fed’s preferred inflation gauge. Data due on Friday is expected to show inflation will remain stable until the end of April.
Several Fed officials will also speak in the coming days.
Japanese yen fluctuates, inflation data expected
The Japanese yen pair eased slightly on Thursday but remained near recent highs amid continued yen weakness.
But further weakness in the yen was blocked by the possibility of further government intervention after the government was seen intervening in currency markets in early May. USDJPY reaching 160 triggered the latest intervention.
Focus has now turned to the upcoming report due on Friday to provide more insight into the Japanese economy. Any signs of rising inflation could bring some relief to the yen.
Asian currencies remained generally weak. The Chinese yuan weakened slightly after the People’s Bank of China allowed the currency to fall to a six-month low this week amid growing pressure from concerns about the sluggish Chinese economy.
from China is expected on Friday.
The Australian dollar traded sideways, unsupported by stronger-than-expected inflation data on Wednesday.
The Singapore dollar rose 0.1% and the South Korean won rose 0.5%.
The Indian Rupee pair rose slightly and remained near recent record highs.