Most Asian currencies were subdued on Tuesday, with the Thai baht leading the laggards, as traders refrained from making fresh bets ahead of a key US inflation report that could influence the Federal Reserve’s rate trajectory.
Investors are laser focused on the consumer price index data expected later in the day, with a forecast monthly increase of 0.4%. Any sudden upside surprises could potentially lead to investors exiting riskier assets.
Ahead of the release, a Reuters poll showed that the Fed is likely to slash rates in June.
At 0410 GMT, the dollar index - which measures the strength of the greenback against six major rivals - was at 102.82.
In Asia, Thailand’s baht led the laggards for the day, dropping about 0.3%, while the Taiwan dollar fell modestly.
The Philippines peso also slipped marginally. The archipelago nation’s trade deficit widened slightly in January to $4.22 billion from $4.18 billion the prior month, according to preliminary official data.
“While the peso has outperformed recently, we continue to see PHP underperforming through 2024 as the current account deficit remains large and FX valuations are not attractive,” Michael Wan, a FX strategist with MUFG, said in a client note.
The peso is currently trading flat on a year-to-date basis, while the only emerging Asian currency trading in positive territory is the Indian rupee , which has gained about 0.6%.
Other currencies such as the Singapore dollar, Malaysian ringgit and South Korean won traded flat.
Most Asian currencies muted; US CPI in focus
Elsewhere in emerging markets, Argentina, which has been undergoing an economic crisis, slashed its interest rates to 80% from 100%. The country’s peso last traded at 848.00 per dollar.
In Asia, most markets perked up, with stocks in Seoul, Kuala Lumpur , Manila and Singapore trading between 0.2% and 0.4% higher.
Taiwan shares rose about 0.9%, not far from a record high posted last week that was propelled by enthusiasm across global artificial intelligence stocks.
“We maintain our view that the AI-wave, which is driving the tech cycle’s turn in Korea and Taiwan, is likely to have fewer spillovers into South East Asia’s economies, which serve the downstreaming services for production of legacy chips,” Barclays analysts wrote.
Indonesia markets remained closed for a public holiday.