Asian currencies rise as dollar rally cools ahead of GDP and inflation data By Investing.com

Investing.com– Most Asian currencies strengthened, albeit slightly, on Thursday as a rebound in the dollar stalled ahead of key economic readings that are likely to weigh on the outlook for interest rate cuts.

Regional currencies came under renewed pressure this week as the dollar rebounded from 13-month lows amid growing speculation about how much the Federal Reserve will cut interest rates this year.

Fears of renewed trade tensions between China and the West also weighed on overall sentiment.

Dollar rally cools with GDP, PCE tests on tap

And both fell 0.1 percent in Asian trade as the recovery from 13-month lows cooled.

Focus turns to a revised reading of second-quarter data, due later Thursday, for more insight into the US economy.

The first reading of second-quarter GDP showed the US economy remained resilient, fueling hopes that the world’s largest economy is poised for a soft landing. But robust growth also gives the Fed less impetus to cut interest rates sharply.

data – the Fed’s preferred gauge of inflation – is due on Friday and is likely to factor in the outlook for interest rates.

Traders are split between a discount of 25 and 50 basis points in September, it showed.

Japanese yen stable, Tokyo CPI expected

The Japanese yen steadied on Thursday after rallying strongly earlier this week. The pair settled around ¥144.56 after dropping as low as ¥143 on Tuesday.

The yen was supported by persistent bets that the Bank of Japan will raise interest rates further this year, following a string of bullish signals from BOJ officials. But the country’s inflation data somewhat lowered the BOJ’s expectations for a steady rise in inflation.

The focus is now on the Tokyo dates, which are due on Friday. The reading acts as a proxy for national inflation and is likely to factor in expectations of rising interest rates.

Broader Asian currencies advanced after showing weakness earlier this week.

The Chinese yuan pair fell 0.2%, supported by a series of stronger-than-expected fixes by the People’s Bank.

But sentiment toward China remained dire amid fears of a trade war with the West, especially after Canada joined the U.S. and European Union in imposing high import tariffs on China’s electric vehicle sector.

The Aussie dollar rose 0.3 percent, extending gains from the previous session, as a tight deadline for July raised expectations for a Reserve Bank call, although analysts were not convinced the RBA would raise interest rates further.

The South Korean won pair was down 0.1 percent, while the Singapore dollar pair was down 0.2 percent.

The Indian rupee pair eased slightly after testing the 84 rupee level earlier this week and remained modest.