Investing.com – Most Asian currencies fell on Thursday, while the dollar steadied after recent gains as markets sought more information on U.S. interest rates ahead of manufacturer and retail sales inflation data due later in the day.
Regional currencies are still reeling from stronger-than-expected growth in the U.S. economy earlier this week, adding to bets that the Federal Reserve is in no hurry to cut interest rates.
Dollar stable as data reset ahead of Fed meeting
Asian trading stabilized on Thursday after reversing some of its gains earlier this week.
The focus was on more inflation signals and data, especially after better-than-expected CPI data on Tuesday.
The data also comes just days before next week, when the central bank is expected to keep rates steady and give scant signals on when it plans to start cutting rates.
Japanese yen strengthens as Bank of Japan meeting approaches
The index, which had largely outperformed its regional peers this week, gave up most of its gains on Wednesday and Thursday.
Negotiations between major Japanese employers and workers’ unions point to a sharp rise in wages in the coming months, a trend that is likely to support inflation in the coming months.
Tighter inflation and higher inflation are the two main factors why the Bank of Japan could begin to unwind its negative interest rates and yield curve control (YCC) policies – a scenario that bodes well for the yen.
The Bank of Japan, according to media reports, may end negative rates and YCC either then or during its April meeting. Recent signs of strength in the Japanese economy have also added credence to expectations of a less dovish behavior from the Bank of Japan.
But a former Bank of Japan official said on Thursday that the bank is in no rush to normalize policy after ending its negative interest rate regime, indicating Japanese interest rates will rise modestly this year.
Asian currencies were broadly lower as attention remained focused on upcoming US data. A 0.1 drop after rising commodity prices pushed the currency to a nearly two-month high in recent sessions.
The fall was 0.1% amid persistent doubts about the country’s economic recovery.
The index lost 0.2% and 0.1% respectively, while the rate stabilized after a sharp recovery from 83 this month.