Investing.com – Most Asian currencies rose slightly on Wednesday as dollar weakness brought some relief to regional markets, although the Japanese yen remained weak despite concerns about government intervention.
The dollar retreated further from recent five-month peaks this week amid some weak Purchasing Managers’ Index data. But persistent bets on higher U.S. interest rates and expectations of more important economic indicators had traders leaning heavily toward the dollar.
Yen weakens, USDJPY approaches 155
But the Japanese yen saw little relief from the weaker dollar, with the pair trading near 34-year highs and near the 155 level.
The yen weakened even as scores of Japanese officials warned of government intervention to prop up the beleaguered currency. Traders saw that USDJPY at 155 could potentially attract government intervention.
The yen’s weakness comes ahead of trading this Friday, when the central bank is expected to keep interest rates unchanged after a historic hike in March. But his forecasts for inflation and economic growth will be closely watched.
Australian dollar rises amid higher-than-expected inflation
The Australian dollar was one of the best performers in Asia on Wednesday, rising 0.5% to a nearly two-week high.
The currency jumped after first-quarter inflation came in above expectations, exceeding the Reserve Bank of Australia’s annual target of 2-3%.
The data gives the RBA further incentive to keep interest rates high for longer, which bodes well for the Australian dollar.
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Dollar stabilizes after one-day losses, GDP and inflation data expected
The index was little changed in Asian trade after falling sharply on Tuesday as data showed an unexpected decline in US business activity.
But the dollar held on to most of its gains from April as traders discounted expectations that the Federal Reserve would cut interest rates soon.
More important U.S. economic data will be released this week, with first-quarter data due on Thursday and the Fed’s preferred inflation gauge on Friday. Both indicators are expected to influence the central bank’s interest rate outlook.
The dollar’s weakness brought some relief to Asian currencies, although they still suffered losses in April.
The Chinese yuan stabilized near a five-month high amid renewed doubts about the recovery of Asia’s largest economy. However, further weakening of the yuan was limited by signs of intervention by the People’s Bank in the foreign exchange market.
The South Korean won fell 0.2% and the Singapore dollar fell 0.1%.
The Indian rupee moved further away from the record highs reached last week, but remained well above the 83 level.