Asia FX muted ahead of US inflation data; USDJPY nears 152

Asian currencies showed minimal movement on Tuesday, with the dollar stabilizing as investors awaited crucial U.S. inflation data later in the week. Despite repeated government warnings of intervention, the Japanese yen edged back towards 34-year lows.

Investors remained cautious, awaiting further signals on U.S. interest rates. The aftermath of Friday’s robust nonfarm payrolls report, which tempered expectations of imminent Federal Reserve rate cuts, lingered in Asian markets. The strength of the dollar, bolstered by the payrolls data, and rising U.S. Treasury yields weighed on Asian currencies.

USDJPY crept towards the 152 level, despite intervention threats from Japanese authorities. The yen faced challenges amidst prolonged higher U.S. interest rates, compounded by the Bank of Japan’s dovish stance following its first rate hike in 17 years.

As attention turned to upcoming events, including Wednesday’s release of consumer price index (CPI) data and Federal Reserve meeting minutes, the dollar held steady. CPI figures for March are anticipated to exceed the Fed’s 2% target, reducing pressure for early rate adjustments. Doubts lingered over potential rate cuts in June, as several Fed officials highlighted persistent inflationary pressures.

Asian currencies remained subdued, with the Australian dollar dipping on deteriorating consumer sentiment. The Chinese yuan faced selling pressure amid concerns about the pace of China’s economic rebound. The South Korean won weakened marginally, while the Singapore dollar stabilized. The Indian rupee held steady near record highs above the 83 level against the dollar.