Asia exchange rate steady, dollar softens on inflation, economic cues on tap De Investing.com

Investing.com– Most Asian currencies were little moved on Tuesday as the dollar dipped in anticipation of key inflation data later in the day, while the Japanese yen weakened further well ahead of more indications on the economy.

Sentiment against regional currencies remained subdued after a big risk-off move in markets last week, while a trade in the yen also weighed.

Uncertainty ahead of other economic signals from China also weighed on lingering concerns about a slowdown in the region’s largest economy.

The dollar is set with CPI data on tap

And they moved little in Asian trade, extending a sluggish overnight performance as anticipation of inflation data deterred big bets.

The data, due on Wednesday, are expected to show that inflation eased slightly in July – a scenario that gives the Federal Reserve more room to start cutting interest rates.

Lower rates are bad for the dollar. A weaker inflation reading could also stoke renewed worries about a US recession, leading to even deeper interest rate cuts from the Fed.

Traders are split on a 25 or 50 basis point cut by the Fed in September, with the July inflation estimate likely to factor into the decision.

Beyond inflation data, data is also available this week.

Japanese yen weakens further, GDP data expected

The Japanese yen’s weakness persisted following less shocking statements from the Bank of Japan last week, with the pair climbing 0.2 percent to 147.48 yen.

The pair fell as low as ¥141 last week amid rising haven demand and an ongoing carry trade. But traders have questioned how much scope the BOJ has to raise interest rates further this year.

data showed Japan’s factory inflation rose as expected in July.

Second-quarter data due on Thursday will weigh in on the outlook for Japanese rates. Any sign of resilience in the economy, especially on the back of stronger wages, gives the BOJ more impetus to raise rates – a scenario that bodes well for the yen.

Broader Asian currencies were halted. The Chinese yuan weakened slightly, with the pair up 0.1%, with data due later this week.

The Australian dollar was among the few outliers, with the pair strengthening 0.2%. Westpac data showed they improved slightly in August.

The South Korean won pair was up 0.1%, while the Singapore dollar pair was slightly lower.

The Indian rupee pair remained close to record highs after showing a sharp drop in inflation through July on Monday.