The yen remained close to a three-month low against the dollar on Tuesday, influenced by robust U.S. inflation data that supports the argument for sustained higher interest rates.
This contrasts with Japan's economic recession and uncertainties regarding an imminent departure from its accommodative monetary policy.
In the Asian market, the focal point is China's loan prime rate (LPR) decision, with expectations of a reduction in its benchmark mortgage reference rate to bolster the country's struggling economic growth. Before the announcement, the offshore yuan slightly declined to 7.2143 per dollar.
The dollar, now exceeding the psychological 150 per dollar level for six consecutive sessions, stood at 150.25 yen. Japanese officials have issued warnings in an attempt to stabilize the currency.
Last week's higher-than-expected U.S. producer and consumer prices data tempered market expectations for the Federal Reserve to ease interest rates this year. Futures now indicate approximately 90 basis points of cuts in 2024, down from around 160 bps at the end of the previous year.
Contrarily, Japan's unexpected recession in the final quarter of last year has led investors to reconsider the likelihood of the Bank of Japan (BOJ) departing from its ultra-loose monetary policy in the near term.
Current data from Japan indicates a less optimistic picture than the BOJ would prefer for a move away from negative interest rates, according to Rodrigo Catril, a senior currency strategist at National Australia Bank (NAB).
In the broader market, the dollar showed marginal gains, with the euro slipping 0.09% to $1.0770, and sterling dipping 0.06% to $1.2588. The New Zealand dollar eased 0.11% to $0.6143.
The market is relatively subdued, awaiting more substantial data to influence direction. NAB's Catril emphasizes the significance of U.S. data for market movement.
U.S. Treasury yields edged higher in response to last week's inflation data and the adjustment of Fed expectations. The benchmark 10-year yield rose about 2 bps to 4.3166%, while the two-year yield remained steady at 4.6565%.
The dollar index, gauging the greenback against major peers, rose 0.03% to 104.33.
In the South Pacific, the Australian dollar fell 0.14% to $0.6531. Minutes from the Reserve Bank of Australia's February meeting, released on Tuesday, revealed that policymakers considered a quarter-point rate hike but opted to hold steady due to progress in inflation and a labor market loosening faster than anticipated.
Paraphrasing text from "Investing" all rights reserved by the original author.
