Investing.com – Most Asian currencies were little changed on Wednesday while the dollar steadied as anticipation of key U.S. inflation data expected to weigh on the interest rate outlook discouraged any big bets.
Potential intervention by the Japanese government in currency markets also kept traders on edge as the yen remained near its lowest level in 34 years.
The dollar is stable, the consumer price index is awaiting new signals on interest rates
The index was little changed in Asian trade, hovering around the 104 level as focus remained on upcoming inflation data for March.
Data is expected to show inflation remained stable in March, a trend that gives the Federal Reserve less incentive to begin cutting interest rates. It also follows a high-profile report that further points to the Fed’s hawkish stance.
In addition to the CPI data, CPI data will also be released on Wednesday. While the central bank said it would cut rates by 75 basis points during the meeting, multiple Fed officials warned that persistent inflation could change that outlook.
Yen Watches Intervention As USDJPY Nears 152
Markets were also on edge over any potential intervention in the foreign exchange market by the Japanese government, especially as the pair remained close to the 152 level, its highest level since 1990.
Japanese officials have issued numerous verbal warnings that they will act on speculation against the yen. This made traders wary of maintaining long positions in USDJPY.
Slightly weaker-than-expected inflation data caused the yen to move slightly. Japanese inflation is expected to rise in the coming months, driven by higher wage growth.
USDCNY unchanged, Fitch lowers China’s credit outlook
The Chinese yuan pair remained little changed on Wednesday following the strong midpoint fixing by the People’s Bank of China.
But sentiment on Chinese markets worsened following China’s credit rating outlook, citing concerns about rising debt levels and slowing economic growth.
USDCNY remained near five-month highs, although further gains in the pair were largely capped by the PBOC, signaling Beijing’s growing discomfort with the yuan’s weakness. The PBOC was also seen interfering in foreign exchange markets.
Asian currencies were broadly flat to tame as the focus remained on fresh signals from the US. The Australian dollar fell 0.1%, while the Singapore dollar treaded water.
The South Korean won fell 0.2% while the Indian rupee remained near record highs above 83.0.