Investing.com– Most Asian currencies remained narrowly ranged on Wednesday, while the dollar retreated from more than two-year highs as traders awaited key consumer inflation data that is likely to weigh on the outlook for interest rates.
The focus remained on US President-elect Donald Trump’s plans for higher trade tariffs, while comments from several Federal Reserve officials were also available.
Traders were also awaiting a decision on interest rates in China and labor market data from Australia – due in the coming days – for more signs on Asian markets.
The Chinese yuan hovered around a 16-month high, while the Australian dollar pair fell 0.2% to remain near a five-year low.
Worries about higher US rates weighed on most other Asian currencies. The Japanese yen pair was steady, getting a little support from the Bank of Japan’s comments that the central bank will discuss raising interest rates when it meets next week.
The Singapore dollar rose 0.1%, while the Indian rupee rose slightly after hitting a record high of more than 86.6 rupees. India’s fell to a four-month low in December, data showed on Tuesday.
The dollar is moving below the highest level in two years with the CPI
And it steadied in Asian trade after falling from more than two-year highs in overnight trade.
The dollar’s weakness was mainly caused by the lower-than-expected inflation data for December. The reading fueled some hopes that inflation would moderate and give the Fed more room to continue cutting interest rates.
But certain components of the PPI reading — which also takes into account the data, the Fed’s preferred gauge of inflation — showed stronger for December, indicating that core inflation likely remained high.
The focus is now squarely on inflation data, due out later on Wednesday, for more clues on interest rates. The reading comes amid growing anxiety that sticky inflation will keep US interest rates higher for longer, especially after the Fed warned of a slower pace of rate cuts this year.
The focus has also been on Trump’s plans for trade tariffs, which central bankers have warned could support inflation in the long run. Reports this week indicated that Trump’s team is considering a plan to gradually increase tariffs.
South Korean winner stable after arrest of President Yoon
South Korea’s won was steady after local media reported that impeached President Yoon Suk Yeol had been arrested over a failed attempt to impose martial law in December.
Authorities arrested Yoon at the presidential compound in the second attempt this month to arrest the president, who will now stand trial for sedition.
Yoon’s arrest marks a possible end to heightened political uncertainty in South Korea since his impeachment in early December. The won fell to its weakest level since 2009 amid heightened political uncertainty.
