Most Asian currencies weakened on Tuesday as market holidays across most of the region kept trading volumes thin, while the dollar caught some bids before a swathe of economic cues due this week.
Gains in the dollar also came amid thin U.S. trading volumes, following a Monday holiday in U.S. markets. This in turn made for few trading cues for Asian markets.
China, Hong Kong, Taiwan, South Korea, and Singapore were closed for the Lunar New Year holiday, with Chinese markets set to remain closed until next week.
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Dollar firms slightly with econ. data, Fed cues in focus The dollar index and dollar index futures rose slightly in Asian trade, extending overnight gains.
Focus this week is squarely on a swathe of U.S. economic cues, including the minutes of the Federal Reserve’s January meeting, due on Wednesday.
The minutes come after the Fed left interest rates unchanged and warned that risks to inflation and the labor market still remained. Since then, payrolls and consumer inflation data offered mixed cues on the world’s largest economy.
Industrial production and trade data, due in the coming days, are expected to provide more signals.
PCE price index data for December, due on Friday, will be a key reading for markets. The print is the Fed’s preferred inflation gauge, and is widely expected to factor into long-term interest rate projections.
Japanese yen firms, Australian dollar muted The Japanese yen’s USD/JPY pair fell 0.2%, recovering mildly from steep losses in the prior session after gross domestic product data read substantially weaker than expected for the fourth quarter.
The reading raised concerns over slowing Japanese growth, and drummed up expectations of more stimulus measures from Tokyo.
The yen also took some support from reports stating that the Bank of Japan was likely to raise interest rates by as soon as April.
Among other Asian currencies, the Australian dollar’s AUD/USD pair fell slightly after the minutes of the Reserve Bank of Australia’s February meeting showed policymakers remained uncommitted towards raising interest rates further after a 25 basis point hike.
But they flagged continued caution over sticky Australian inflation, with any further price increases likely to invite more tightening.
The Chinese yuan’s USD/CNH offshore pair rose 0.1% but remained close to near three-year lows. The Singapore dollar’s USD/SGD and the South Korean won’s USD/KRW pairs were flat in holiday trade.
The Indian rupee’s USD/INR pair was flat but rose further above the 90 rupee point. The rupee took little support from stronger-than-expected consumer inflation data released last week.
