Asia Forex Falls As the Dollar Holds Steady before CPI Readings

The Asian forex markets went down a little bit on Wednesday because traders stayed away from risky assets before this week’s important inflation data. On the other hand, the dollar has recovered from its recent losses.

After an excellent start to the week because of promises that China would start up again, regional units started to go down because they were still determining how U.S. monetary and fiscal policy would change in the future.

Also, the dollar stopped falling after seven months because some members of the Federal Reserve said again that interest rates in the U.S. might go up more than expected this year. This is especially true if the price level starts running above the central bank’s target zone for longer than expected.

On Wednesday, both the dollar index futures and the dollar index indicated that the dollar value was trading at a level that was 0.1% higher when measured against a selection of other currencies.

The data published for the index of consumer prices in the United States for December is currently the center of attention. The data will be anticipated to reveal that inflation fell more than in the previous month.

Japanese Yen Declines 0.1% against the USD

On the other hand, the value of the Japanese yen decreased by 0.1% against the USD, even though Tokyo consumer price index data published this week proceeded to drive up expectations that perhaps the Bank of Japan might react to more hawkish steps to stabilize the currency and pacify inflation that has become too high.

The Yuan has had a decent start to the calendar year on the back of optimism around the state’s easing of primary anti-COVID measures. The currency was slowly approaching highs not seen in over five months. But this optimism went down when China had its worst COVID-19 outbreak, which is expected to slow down economic growth soon.

This week, people will also pay attention to the Chinese consumer price index (CPI) inflation numbers for December, even though slowing economic growth in China is expected to lead to deflationary trends.

After data showed that consumer price inflation in Australia climbed back to 30-year spikes in November, the Australian dollar was one of the few special cases for the day, climbing 0.3% and remaining near its four month peak.

This came after figures suggested that CPI inflation in the state soared back to thirty-year highs in November. The number is likely to convince the Reserve Bank to tighten monetary policy even more, which would be suitable for the currency.

Independent research showed that retail sales went up more than expected during November. This was attributed to the fact that there were more deals available during the Black-Friday shopping show.

Philipine Peso and Indian Rupee Decline by 0.3% and 0.1%, Respectively

The risky currencies of Southeast Asia, such as the Philippine peso and the Thai baht, also saw more significant loss than its regional rivals, with the Philipine peso losing 0.3% and the Thai baht declining 0.2%.

After reaching its highest level against the USD one month before this week, the value of the Indian rupee fell by 0.1% later the same week. India’s consumer price index inflation data is also scheduled to be released on Thursday. Analysts anticipate that it will indicate that price pressures stayed unchanged in December.