The dollar found support in Asia on Wednesday after stubbornly high U.S. inflation suggested interest rates are going to remain high for longer than investors had expected.
Headline CPI was 0.5% in January, mostly due to higher rental and food costs. That was in line with forecasts, though the annual figure of 6.4% was a bit more than expected and bets on rate falling toward the end of 2023 were being quickly unwound.
The U.S. dollar climbed to a six-week high of 133.30 yen on Tuesday and sat not far below that at 133.11 early in the Asian afternoon. Down 0.6% to $0.6300, the New Zealand dollar was setting to test support around $0.6270.
The Australian dollar fell 0.7% to $0.6935. China’s yuan hit a one-month low at 6.8463 to the dollar. Sterling and the euro each fell about 0.2%.
The moves seem to be firmly arresting a steep slide in the dollar that ran through January.
“Market hopes of rapid disinflation continue to recede,” said Bank of Singapore currency strategist Moh Siong Sim.
“The risk is that the Fed might nudge up its dot plot (rate projections) a tad at the March meeting.”
This report’s information was first seen on REUTERS; to read more, click this link.
