Dollar inactive on Asia FX in anticipation of CPI data
2023.02.14 01:23
Asia FX cautiously higher as dollar retreats before CPI data
By Tiffany Smith
Budrigannews.com – On Tuesday, traders awaited additional economic cues from key U.S. inflation data due later in the day, and the Japanese yen rose amid speculation regarding the new Governor of the Bank of Japan. The majority of Asian currencies rose slightly, capitalizing on some weakness in the dollar.
Following reports that Japan nominated academic Kazuo Ueda as the next central bank governor, which came as a surprise considering expectations that the position would go to career central bankers, the rose 0.3 percent and was one of the best performers for the day.
The unanticipated selection also stoked speculation that Ueda might end the BOJ’s control over the yield curve sooner rather than later as the country battles rising inflation and weakening growth.
On Tuesday, preliminary data revealed that inflation and weak overseas demand continued to weigh on the Japanese economy in the fourth quarter.
The dollar fell from a five-week high against a basket of currencies while broad Asian currencies rose. Each of the and fell about 1%.
The U.S. inflation that is due later in the day is the primary focus. Although the reading is anticipated to have decreased from the previous month in January, it is nonetheless anticipated to remain relatively high.
Markets are also wary of big surprises in, which could push the Federal Reserve to keep raising interest rates this year.
Given that it would drive capital out of the region and raise yields on less risky debt, such a scenario bodes poorly for Asian currencies.
However, the dollar’s profit-taking helped Asian currencies ahead of the data. grew by 0.4 percent, while the grew by 0.4 percent and 1.1 percent, respectively.
The data showed that grew more than anticipated in January and is now back above the Reserve Bank’s upper limit of 6%, resulting in a 0.1% decrease. The reading points to immediate economic pressure on the Indian economy, in addition to giving the RBI’s hawkish stance more support.
The was muted because data showed that it got much worse in the beginning of February, indicating that spending might slow down as local economic growth slows.
