Asian Fx Remain Muted

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Asian Fx Remain Muted

Asian Fx Remain Muted Ahead Of Us Inflation Data

Most of the Asian currencies showed little movement on Tuesday as the focus is now on the US inflation data (CPI). The close relationship between inflation and interest rates is what's weighing heavily on the FX markets.

As the Asian currencies remain muted, the US dollar appears to be steady, and the inflation data is expected to show yet another surprise reading.

The Japanese Yen, in particular, remained under focus as it continued to show weakness against other currencies. However, potential intervention by the BoJ is also on the cards, which has raised the stakes even more.

Usd/Jpy Trades Above 156.00

USD/JPY has already crossed the 156.00 handle with a +0.1% change during Tuesday's session. So, it is safe to say that the fear of intervention is now very real and relevant.

In fact, USD/JPY has already recovered most of its losses seen during May 2024 when the government intervention led to a flash crash.

Elsewhere, the Chinese Yuan (CNY) is also inching lower as the USD/CNY showed a change of +0.1% on Tuesday. The sentiment regarding the Chinese economic recovery has turned sour as Agile Group Holdings LTD has recently defaulted.

As a result, any optimism that was building up in the Chinese economy has been offset by the default of a major property firm.

While most Asian currencies are under pressure, the DXY is showing some minor gains as the risk sentiment favors the greenback.

Up ahead are the PPI and the CPI, the two key indicators for gauging the inflation situation in the USA. Both of these factors are closely watched as they have major implications for the interest rate policy.

Meanwhile, the AUD/USD is down by 0.1%, and the USD/KRW is up by 0.2%. Similarly, the USD/SGD has shown a +0.1% change, which is a sign of the strength of the USD.

The USD/INR is also trading at record highs after the recent release of the Indian CPI, which showed no change in April.

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