Asian currencies weakened against the U.S. dollar on Wednesday, taking cues from the overnight spike in Treasury yields and strength in the dollar. Market participants were also awaiting the release of the Federal Reserve's minutes from the February meeting, and more inflation data.
The Chinese yuan dropped 0.3%, as economic indicators released so far have painted a mixed picture of the country's economic recovery. The yuan was also pressured by rising uncertainty over the recovery of China's economy.
The minutes from the Federal Reserve's February meeting are expected to reiterate the central bank's hawkish stance. That stance holds more ground now, as U.S. inflation readings for January were higher than expected.
The U.S. Personal Consumption Expenditures index – the Fed's preferred inflation gauge – is also due this week, and is expected to reiterate that inflation remained sticky in January. The reading is due on Thursday, and will provide further clues on the direction of U.S. monetary policy.
0. “Asia FX dented by rising yields, dollar gains as Fed minutes loom” Yahoo Finance, 22 Feb. 2023, https://finance.yahoo.com/news/asia-fx-dented-rising-yields-015123118.html
1. “Asian stocks hit by tech rout, more Fed cues awaited” Yahoo Life, 22 Feb. 2023, https://www.yahoo.com/lifestyle/asian-stocks-hit-tech-rout-000230842.html