Investing.com — Most Asian currencies rose slightly on Wednesday as a weaker dollar brought some relief to regional markets, although the Japanese yen continued to underperform despite concerns about government intervention.
The dollar retreated further from recent five-month highs this week as some Purchasing Managers Index data were weak. But persistent bets on longer U.S. interest rates and expectations for more important economic data kept traders largely biased toward the dollar.
USDJPY depreciates towards 155
However, the Japanese yen has received little relief from the dollar’s weakness and remains near its highest level in 34 years, with a level of 155 yen now within sight.
The yen fell even as many Japanese officials warned of government intervention to support the struggling currency. Traders saw USDJPY at $155 as potentially inviting government intervention.
The yen’s weakness comes ahead of this week on Friday, when the central bank is expected to keep interest rates on hold after a historic hike in March. However, the outlook for inflation and economic growth will be closely monitored.
Australian dollar rises due to higher-than-expected inflation
The Australian dollar pair was among the best performers in Asia on Wednesday, rising 0.5% to its highest in almost two weeks.
The currency soared after stronger-than-expected inflation in the first quarter, further beating the Reserve Bank of Australia’s annual target of 2% to 3%.
This outlook gives the RBA further impetus to maintain interest rates for the long term, which bodes well for the Australian dollar.
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Dollar stabilizes after overnight losses, awaiting GDP, inflation data
Asian trade was little moved after plunging on Tuesday as data showed unexpected weakness in U.S. business activity.
However, the dollar retained most of its gains through April as traders priced in expectations for an early rate cut by the Federal Reserve.
More important U.S. economic data will be released this week, with first-quarter data due on Thursday and the Fed’s recommended inflation measure on Friday. Both indicators are widely expected to be factored into the central bank’s interest rate outlook.
Although the weaker dollar brought some relief to Asian currencies, they were still falling as of April.
The Chinese yuan hovered near a five-month high as doubts about the recovery in Asia’s biggest economy reignited. However, signs of foreign exchange market intervention by the People’s Bank limited further renminbi depreciation.
The Korean won fell 0.2%, and the Singapore dollar fell 0.1%.
The Indian rupee has come a long way from its all-time high hit last week, but is still well above the $83 level.
