Asia FX muted, dollar flat amid mixed U.S., Chinese economic cues - News Time

Asia FX muted, dollar flat amid mixed U.S., Chinese economic cues

By Ambar Warrick — Most Asian currencies traded in a flat-to-low range on Wednesday as data showed a somewhat mixed recovery in the Chinese economy, while the dollar stuck to a near one-month low after consumer inflation eased as expected.

Chinese yuan

fell 0.2% after data showed

industrial production

grew less than expected in February, as the manufacturing sector struggled to recover from COVID-era lows.

retail sales

surged as expected, while higher-than-expected

fixed asset investment

showed that certain facets of the economy were recovering after the lifting of anti-COVID measures earlier this year.
Still, weakness in the manufacturing sector, which usually acts as a bellwether for China’s economy, showed that a bigger recovery was still a long way off. A recovery in China bodes well for the broader Asian economy, given the country’s position as a dominant trading partner for the region.
Broader Asian currencies were muted as data released overnight provided mixed cues on the U.S. economy. The

Japanese yen

fell 0.2% against the dollar, while the

Philippine peso

added 0.3%, leading gains across Southeast Asia.

consumer price index

inflation (CPI) eased as expected in February. But stickier-than-expected

core CPI inflation

showed that price pressures still remained relatively elevated, which could put more pressure on the Federal Reserve to tighten monetary policy.
Markets are betting that the Fed will have limited economic headroom to raise rates, given the increased pressure on the banking sector. The U.S. government intervened in the sector after the collapse of several regional banks last week.

dollar index


dollar index futures

traded sideways on Wednesday, and were nursing steep losses over the past few sessions.

producer price inflation


retail sales

data is due later in the day, and is expected to provide more cues on the economy ahead of a

Fed meeting next week

. The central bank is expected to raise rates by 25 basis points.

Indian rupee

fell 0.2% after data released on Tuesday showed that

wholesale inflation

in the country grew much less than expected in February. The reading, coupled with earlier data that showed an easing in

consumer inflation

, drove up bets that the Reserve Bank will eventually hold on future interest rate hikes.

South Korean won

rose 0.1% as data showed the country’s massive

trade deficit

narrowed slightly in February.

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