The Dollar edged higher in Asian trading on Wednesday, gaining only limited support from renewed attacks on shipping in key Middle Eastern waterways, as currency markets remained on edge ahead of the release of inflation data later in the day.
The Yen weakened 0.1% against the Dollar to 159.44, touching its lowest level of the month despite the recent joint intervention by US and Japanese authorities aimed at supporting the Japanese currency.
The Euro slipped 0.1% to $1.1534, Sterling was little changed at $1.3505, while the Australian Dollar fell 0.1% to $0.7056.
The New Zealand Dollar fell 0.3% to $0.5866 after Prime Minister Christopher Luxon said on Wednesday that he had secured the support of lawmakers in a confidence vote, following speculation over his leadership just months before the country’s general election.
Markets are primarily focused this week on the release of US inflation figures later on Wednesday, which could provide fresh clues about the Federal Reserve’s interest rate path.
Expectations remain uncertain after last week’s weaker-than-forecast jobs data and comments from Fed Chair Kevin Warsh last month failed to ease doubts over the central bank’s next moves, Reuters reports.
The US Dollar index, which tracks the greenback against a basket of six major currencies, edged up 0.1% to 99.89.
Oil prices rose in Asian trading, with Brent crude gaining 0.9% to $89.69 a barrel. The move followed an attack by Iran-backed Houthi forces on a cargo vessel in the Bab el-Mandeb Strait, along with a US military strike on a container ship off Pakistan that was attempting to breach the blockade of the Strait of Hormuz.
Meanwhile, Chicago Fed President Austan Goolsbee said on Tuesday that the Federal Reserve remained more concerned about inflation staying elevated than weakness in the labour market.
Markets remain divided over the Federal Reserve’s next policy move. According to CME Group’s FedWatch tool, Fed funds futures are pricing in an even 50% chance that the central bank will keep interest rates unchanged at its two-day meeting ending on 16th September, while also assigning a 50% probability to a 25-basis-point rate hike.