S.Korea's won and Philippine peso rise, US inflation in focus

South Korea's won and Philippine peso appreciated modestly on Wednesday as the US dollar eased slightly from its near one-year highs as markets awaited US inflation numbers, while most other Asian currencies treaded water.

The US dollar is being supported at its near one-year highs on expectations that the US Federal Reserve would begin tapering stimulus next month, as rising oil prices and an energy crisis in China fuel inflation concerns.

The dollar index, which measures the greenback against six rivals, eased marginally to 94.363 from Tuesday, when it touched 94.563 for the first time since late September 2020.

Investor focus turns to the US September inflation numbers in the wake of mounting inflationary pressures to gauge the Fed's policy, with markets keeping an eye on a quicker-than-expected tightening.

"Expectations are for US core inflation rate to remain elevated at 4% year-on-year, with any outperformance potentially providing further strength for the dollar," Yeap Jun Rong, a market strategist at IG said in a note.

"The overall risks to markets may be a quicker-than-expected pullback in monetary policy support, and the inflation data will be looked upon for confirmation."

In Asia, South Korea's won appreciated nearly 0.5% to mark its best day since mid-September, recovering from its 0.4% drop in the previous session, while equities jumped more than 1% after a sharp 1.4% decline the prior day.

Malaysia's ringgit, Singapore dollar gains as travel curbs ease

Among other currencies, the Philippine peso firmed 0.3%, Singapore dollar added 0.2% a day ahead of the third-quarter preliminary economic growth data, while Malaysia's ringgit logged modest gains.

In Singapore, preliminary data is expected to show that the city-state's economy grew 6.6% on year, versus 14.7% in the prior quarter, according to a Reuters poll.

The Monetary Authority of Singapore (MAS), which manages policy via exchange rate settings rather than interest rates, letting the Singapore dollar rise or fall within an undisclosed band, is expected to make no changes to its policy, the Reuters poll showed.

However, analysts at Singapore-bank DBS expect the MAS to "replace the zero-appreciation path of the Singapore dollar nominal effective exchange rate policy band with a modest and gradual appreciation path", adding that the local dollar will continue to follow the rising US dollar trend.

Equities in the region were largely in the positive, with shares in Jakarta jumping nearly 2% to hit a more than two-year peak, while Singapore's Straits Times soared 1.45% to hit a near two-month high.

Shares in Kuala Lumpur and Manila advanced up to 0.7% each, while Taiwan's benchmark lost initial gains to slip about 0.8%, its third negative session in a row.

Markets in Thailand, were closed for a holiday.

Highlights:

Indonesian 10-year benchmark yields falls 2.3 basis points to 6.349%

US 10-year Treasury yields edges higher to 1.5838%

China Sept export growth unexpectedly picks up