The dollar held near a one-month high on Tuesday as investors kept pricing in a possible Federal Reserve rate hike this week. Easing oil prices tempered inflation worries and kept major currency moves in check, while Indonesia's rupiah stayed the weakest performer in Asia after its central bank governor resigned.
The U.S. dollar hovered near a one-month high on Tuesday as investors continued to price in the possibility of a Federal Reserve rate hike this week. Asian currencies traded mostly lower against the greenback ahead of a packed week of central bank meetings.
Moves stayed shallow across the majors. The US Dollar Index slipped 0.1% to 101.46, while the USD/EUR pair fell 0.1% to 1.1377 and USD/GBP lost 0.1% to 1.3299.
Fed decision headlines a packed policy week
Markets continued to price roughly a 38% chance of a 25-basis-point Fed rate hike on Wednesday. Investors also awaited U.S. GDP and core PCE inflation data for further policy clues.
Softer crude prices removed one source of pressure. Hopes for a diplomatic breakthrough between the United States and Iran extended the previous session's sharp decline in crude prices after Washington paused daily strikes, easing fears of another energy-driven inflation shock. According to President Donald Trump, there was a "good chance" of reaching a deal.
Yen stays pinned before Friday's BOJ decision
The Japanese yen remained near multi-decade lows, with the USD/JPY pair little changed near 164 yen, as traders looked to Friday's Bank of Japan decision for fresh guidance on the pace of policy normalisation. Policymakers are widely expected to leave interest rates unchanged, but markets expect the central bank to keep the door open to further tightening after repeated verbal intervention has done little to arrest the yen's prolonged decline.
Elsewhere in the region, the South Korean won's USD/KRW pair was little changed even after the country's equity market suffered a steep technology-led selloff, while Taiwan's dollar underperformed as USD/TWD rose 0.4%. The Singapore dollar's USD/SGD pair edged 0.1% higher as traders digested the Monetary Authority of Singapore's policy tightening on Monday.
Rupiah lags after Bank Indonesia leadership change
Indonesia's rupiah remained the region's weakest performer, with USD/IDR climbing 0.5%, extending losses that followed the surprise resignation of Bank Indonesia Governor Perry Warjiyo earlier this week. Deputy Governor Destry Damayanti has been appointed acting governor as investors assess the implications for policy continuity, and Warjiyo had led the central bank since 2018.
Cheaper oil, meanwhile, underpinned the currencies of major energy importers. The Indian rupee's USD/INR slipped 0.1% as fading geopolitical risk premiums and reports of official intervention supported the currency. The Philippine peso stayed near its record low of 61.85 per dollar, even as USD/PHP edged 0.1% lower.
Traders now turn to policy decisions from the Federal Reserve on Wednesday, followed by the Bank of England and the Bank of Japan later in the week.
Source: Investing.com
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