Investing.com – Most Asian currencies fell on Tuesday as anticipation of this week’s Federal Reserve meeting sent traders heavily toward the dollar, while the Japanese yen fell slightly after recovering on expected government intervention.
Most regional currencies suffered losses throughout April as traders gradually discounted expectations that the Federal Reserve would cut interest rates soon. This view was reinforced by a series of higher-than-expected US inflation figures.
Both dollars rose about 0.3% in Asian trading as investors bet on . The central bank is expected to keep rates steady but could potentially send hawkish signals after the disappointing inflation reading.
Concerns about further interest rate hikes in the US pushed the dollar up 1.3% in April.
Japanese yen weakens, USDJPY rises after falling from 160
The pair, which measures the amount of yen needed to buy one dollar, rose 0.3% to around 156.80 on Tuesday.
The pair fell sharply from a 34-year high above 160 on Monday, sparking speculation that the Japanese government had intervened to support the yen. Traders said the USDJPY at 160 appears to be the new line in the sand for the Japanese government.
While the government has made no official comment on the intervention, the yen’s recovery comes after a series of verbal warnings from Japanese officials over the past month.
Mixed Japanese data contributed to the yen’s weakness on Tuesday. Although the index rose more than expected in March, it fell well short of expectations, presenting a subdued outlook for consumer spending and inflation.
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In April, the yen was the worst performer in Asia, with the USDJPY rising almost 4%.
Australian dollar falls as weak retail sales weigh on rate outlook
The Australian dollar was the worst performer in Asian trading on Tuesday, with the pair falling 0.5% following significantly weaker-than-expected data.
The data showed that persistent inflation and high interest rates are putting strong pressure on consumer spending, leading to a softer inflation outlook. Traders were seen lowering expectations that the Reserve Bank of Australia will continue to raise interest rates this year.
The Australian was to perform in a subdued manner in April.
Chinese yuan weakens amid average business activity indices
The Chinese yuan rose 0.2% on Tuesday after mixed purchasing managers’ index data pointed to a slight slowdown in the Chinese economy.
Official data showed activity slowed slightly less than expected but rose substantially less than expected.
Despite the rosier picture for manufacturing activity, the overall performance still showed limited strength in business activity in China.
In April, the USDCNY pair rose by 0.3%, and further growth was contained by the persistent efforts of the People’s Bank.
Other Asian currencies weakened on Tuesday. The South Korean won rose 0.3% and the Singapore dollar rose 0.1%.
The Indian rupee pair moved closer to record highs hit earlier in the month as caution over the 2024 general elections brought little relief to the rupee.