Investing.com – Most Asian currencies fell on Monday, while the dollar recovered slightly as investors hunkered down ahead of a flurry of U.S. interest rate and inflation signals due later this week.
Waiting for some regional economic signals, notably inflation in Japan and Purchasing Managers’ Index data in China, also kept traders on edge, especially as concerns grow about slowing growth in the region’s largest economies.
Japanese yen hovers above 150, CPI data awaited
The rate was little changed on Monday but hovered well above 150 to the dollar and remained close to three-month lows.
This week the focus has been on Japan’s January CPI data, which is due out on Tuesday. Core inflation figures are expected to fall within the BOJ’s annual target range of 2%, giving the central bank even less incentive to begin aggressive policy tightening.
This idea has been a key driver for the yen in recent months, especially with US rates likely to remain high for a long time. But further losses in the yen have been limited by the threat of potential government intervention, given that levels above 150 have attracted intervention in the past.
Dollar companies with PCE inflation, focus on Fed signals
And both rose 0.1% in Asian trading on Monday after their first weekly loss of 2024.
But the dollar remained within sight of three-month highs as a chorus of Federal Reserve officials warned the bank was in no rush to start cutting interest rates early, especially as inflation remained stubborn.
The data, which is the Fed’s preferred inflation gauge, is expected to provide more insight into inflation this week. More Fed officials are expected to speak this week, likely to reiterate the prospect of higher interest rates over the long term.
This scenario does not bode well for Asian markets as it limits the attractiveness of high-yield, high-risk assets. Most regional currencies fell on Monday, with both currencies losing 0.1%. for January is also due this week.
Quotes remained at the same level, while the fall was 0.1%.
Chinese Yuan fluctuates ahead of PMI test
The index was little changed on Monday following People’s Bank’s stronger-than-expected midpoint forecast.
Sentiment towards Chinese markets remained largely on edge until new signals emerged on the Chinese economy, such as February data due later this week.
Concerns about a slowing economic recovery have been a key factor weighing on the yuan in recent months, keeping the currency near a three-month low.