Investing.com – Most Asian currencies were little changed on Tuesday, tracking a firm dollar as traders remained focused on upcoming U.S. inflation figures that are likely to weigh on the interest rate outlook.
The Japanese yen was also in focus as persistent weakness in the currency left traders wary of any further potential government intervention.
Most regional currencies suffered recent losses against the dollar as traders remained biased towards the greenback ahead of new US interest rate signals.
Japanese Yen Watches Intervention As USDJPY Crosses 156
The yen pair, which inversely reflects currency strength, rose 0.1% on Tuesday to trade well above 156 yen.
The pair clawed back most of its losses incurred earlier in May when the government was seen intervening in foreign exchange markets twice.
While traders now viewed the 160 yen level as a new line for government intervention, USDJPY’s rapid rise despite the threat of intervention raised fears that the government might intervene sooner.
Japanese data showed factory inflation remained largely subdued in April, indicating little inflationary pressure on the Bank of Japan, forcing it to continue tightening policy.
The Chinese yuan fell several inches due to instability in the real estate market
The Chinese yuan rose 0.1% as sentiment on China soured after another major property developer – in this case Agile Group Holdings Ltd (HK:) – defaulted on bond payments.
The default largely offset some optimism about improving inflation in China, as well as Beijing’s recent unveiling of plans for a massive 1 trillion yuan ($138 billion) bond issue.
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The long-term downturn in the property market has become a key pressure point on the Chinese economy, despite Beijing’s repeated attempts to support the sector. Over the past two weeks, many major Chinese cities have eased restrictions on home purchases.
Dollar stable thanks to PPI and CPI data
The rate rose slightly in Asian trading as traders remained biased towards the US dollar ahead of inflation data in the coming days.
data will be released later on Tuesday, with a closer look later on Wednesday. Both readings are likely to weigh on the outlook for US interest rates, as any signs of persistent US inflation will pose further headwinds for Asian currencies.
Most regional units were offline Tuesday. The Australian dollar fell 0.1%, while the South Korean won and Singapore dollar rose 0.2% and 0.1% respectively.
The Indian rupee pair remained close to record highs as data on Monday showed the Indian rupee remained stable in April.