Asia FX moves lower, dollar holds ahead of Investing.com CPI data

Investing.com– Most Asian currencies eased slightly on Monday as traders eased the greenback ahead of key U.S. inflation data this week, which is expected to provide more clues on interest rates.

Regional trading volumes were limited due to a holiday in the Japanese market, which also saw the yen weaken slightly against the greenback. The pair rose 0.3% to ¥147.07, pulling back more from a stellar run over the past month.

Anticipation of economic readings and central bank meetings across Asia kept traders on edge, while sentiment was also buoyed by reports that Iran could launch a strike against Israel in the coming days.

Dollar stalls, CPI data on tap

The two and both moved little in Asian trade, settling after seeing changes last week.

This week the focus is on key data, due on Wednesday, for more clues about the world’s largest economy.

The reading is expected to show some cooling in inflation through July — a trend that could give the Federal Reserve more confidence to start cutting interest rates.

The greenback has been battered by fears of a U.S. recession and bets on more interest rate cuts in recent weeks, with traders pricing in the possibility of a 50 basis point cut in September, according to .

But some solid labor market data last week helped boost bets that US recession fears were overblown.

Chinese yuan weakens, more economic data on tap

The Chinese yuan weakened on Monday, with the pair up 0.2%.

While the yuan’s major losses were stymied by persistent support from the People’s Bank, skepticism about China’s economy kept traders largely out of the currency.

This week’s focus is on China’s industrial production and retail sales data for more clues about the country’s biggest economic drivers.

Broader Asian currencies edged lower as traders remained averse to risk-based assets ahead of several cues for the world’s biggest economies.

The Indian rupee pair held close to record highs, taking some support from a mildly shocking message from the Reserve Bank of India last week. Indian data is available later on Monday.

The South Korean won pair was up 0.4%, while the Singapore dollar pair rose slightly.

The Australian dollar was an exception, with the pair adding 0.2% after a flurry of dovish messages from the Reserve Bank of Australia last week.