Most Asian currencies moved little on Tuesday, while the dollar steadied close to a six-month peak as investors hunkered down before data showing a potential rise in U.S. inflation. <\/p>\n\n\n\n
Markets were also holding out for more economic cues from China, as recent data showed some improvement in\u00a0inflation\u00a0and\u00a0loan activity\u00a0through August. But the overall outlook for the Chinese economy still deteriorated, with a\u00a0Reuters poll\u00a0now forecasting 2023 GDP growth of 5%- in line with China\u2019s official forecast, but lower than forecasts from investment banks.\u00a0<\/p>\n\n\n\n
The\u00a0yuan\u00a0remained resilient through this, with the Chinese currency rebounding from a near 10-month low this week as the People\u2019s Bank rolled out a series of strong daily midpoints. The bank was also seen intervening in currency markets to buoy the yuan.<\/p>\n\n\n\n
Uncertainty over China kept the\u00a0Australian dollar\u00a0trading in a tight range on Tuesday, while a private survey also showed that Australian\u00a0consumer sentiment\u00a0deteriorated further in early-September.\u00a0<\/p>\n\n\n\n
Other China-exposed currencies moved little, with the\u00a0South Korean won\u00a0and\u00a0Taiwan dollar\u00a0both trading less than 0.1% in either direction.<\/p>\n\n\n\n
The\u00a0Indian rupee\u00a0fell slightly after rebounding from near record lows on Monday. Markets were also awaiting\u00a0consumer inflation\u00a0readings from the country, which are expected to show continued resilience in prices through August.<\/p>\n\n\n\n
The\u00a0Japanese yen\u00a0steadied on Tuesday after rebounding sharply from a near 10-month low overnight. The currency was boosted chiefly by comments from Bank of Japan Governor Kazuo Ueda, who said that an end to the BOJ\u2019s negative interest rates could be close.\u00a0<\/p>\n\n\n\n
Ueda said that the BOJ\u2019s 2% inflation target was within sight, which would give the bank more impetus to begin raising rates after nearly a decade of ultra-loose monetary policy.<\/p>\n\n\n\n
But while such a scenario bodes well for the yen, the currency was still nursing steep losses for the year, hit chiefly by a widening gap between local and international interest rates.<\/p>\n\n\n\n
Worsening risk sentiment and fears of a BOJ pivot also diminished the yen\u2019s appeal for carry trade this year. <\/p>\n\n\n\n
The dollar moved little in Asian trade on Tuesday, seeing some consolidation after racing to a near six-month peak in recent sessions. <\/p>\n\n\n\n
The\u00a0dollar index\u00a0and\u00a0dollar index futures\u00a0both steadied in the low-to-mid 104s, after briefly breaching 105 last week.<\/p>\n\n\n\n
Focus is squarely on\u00a0U.S. consumer inflation data\u00a0due on Wednesday, which is expected to set the tone for a\u00a0Federal Reserve meeting\u00a0next week. Inflation is expected to have risen at a faster pace in August from July.<\/p>\n\n\n\n
Any signs of sticky inflation gives the Fed more headroom to either raise rates further, or keep them higher for longer. While the central bank is widely expected to keep rates on hold in September, it is also expected to keep them at over 20-year highs<\/a> until at least mid-2025.<\/p>\n