Investing.com – Most Asian currencies were little changed on Tuesday and the dollar steadied ahead of key U.S. inflation data due later this week, while the Japanese yen returned to 34-year lows despite repeated warnings government intervention.
Traders remained wary of making big bets in anticipation of new signals on US interest rates. Asian markets were also still reeling from Friday’s impressive performance, with traders further downplaying expectations that the Federal Reserve would cut interest rates soon.
Employment data kept the dollar strong and also pushed US Treasury yields higher, which in turn weighed on Asian currencies.
USDJPY returns to 152 despite intervention threats
The Japanese yen weakened slightly on Tuesday and the pair is now back at 152, its highest level since 1990.
The yen’s weakness came even as Japanese officials repeatedly warned that they would respond appropriately to speculation against the yen. But the odds appear to be stacked against the yen, especially in the face of higher, longer-term U.S. interest rates, which have been a key driver for the Japanese currency for nearly two years.
The yen also didn’t get much support from the BOJ’s first rate hike in 17 years, given that the central bank has been sending largely dovish signals about future policy decisions.
Dollar stabilizes amid CPI data and Fed minutes in focus
Asian trade was little changed after several losses overnight. But traders remain heavily weighted towards the US dollar ahead of new US interest rate signals this week.
Inflation data for March is due Wednesday and is expected to show inflation remains comfortably above the Fed’s annual 2% target, giving the central bank little incentive to start cutting rates early.
The reports are also due on Wednesday amid growing doubts over whether the central bank will begin cutting interest rates in June.
Many Fed officials have warned that persistent inflation will prevent the Fed from cutting rates earlier this year.
The idea weighed on most Asian currencies, keeping them in a tight range on Tuesday. The Australian dollar was slightly lower as data showed deterioration in early April.
The Chinese yuan remained well above the 7.2 level as the currency suffered from rising selling amid growing doubts about China’s economic recovery.
The South Korean won weakened, with the pair up 0.1%, while the Singapore dollar treaded water.
The Indian Rupee pair remained little changed and remained near record highs above the 83 level.