Asia FX slips, dollar gains as markets await more Fed cues By

By Ambar Warrick

Investing.com — Most Asian currencies fell on Tuesday, while the dollar advanced against a basket of currencies as markets awaited more cues on U.S. monetary policy from the minutes of the Federal Reserve’s February meeting and more inflation data.

Risk-heavy Southeast Asian currencies were the worst performers for the day, with the leading losses in the region with a 0.7% loss.

The fell 0.1% as data showed local activity shrank far more than expected in February. But this was offset by a bigger-than-expected jump in activity.

Focus this week is on an address by Bank of Japan Governor nominee Kazuo Ueda, which is expected to shed more light on the bank’s ultra-loose policy this year.

The dollar hovered just below a six-week high against a basket of currencies, with the and rising nearly 0.2% each on Tuesday. Broader Asian markets are awaiting the of the Fed’s February meeting, which is expected to reiterate the central bank’s hawkish stance.

A reading on the U.S. – the Fed’s preferred inflation gauge – is also due this week, and is expected to show that inflationary pressures remained elevated in January.

High , coupled with a slew of hawkish comments from Fed officials, saw Asian currencies retreat in recent weeks as fears of more hikes grew. A spike in Treasury yields also supported the dollar and dented regional units.

fell 0.2%, coming under renewed pressure as the People’s Bank held its at historical lows. A recent rally in the currency ran out of steam as markets grew uncertain over the timing of a post-COVID economic recovery in the country.

The fell 0.2% amid uncertainty over a on Wednesday. The bank is widely expected to hike interest rates by 50 basis points as it moves to contain runaway inflation.

The fell 0.2%, even as the of the Reserve Bank’s February meeting showed that the bank had considered a 50 bps hike, before settling on a . But the minutes reiterated that the RBA intends to adopt a data-driven approach to raising rates further.