Asian Currencies Mixed as Aussie Dollar Rises on Hot Inflation

Asian currencies traded in a mixed range on Wednesday, while the U.S. dollar remained relatively steady as investors awaited key U.S. inflation data for fresh signals on the Federal Reserve’s interest rate outlook. The Australian dollar outperformed after stronger-than-expected inflation data increased expectations for another Reserve Bank of Australia rate hike.

The U.S. Dollar Index edged 0.1% higher to 98.99 by 04:28 GMT, remaining close to last week’s three-month low. Markets are focused on the U.S. personal consumption expenditures price index, the Fed’s preferred inflation measure, due later Wednesday.

The PCE inflation report comes ahead of the Jackson Hole symposium this weekend and could shape expectations for the Fed’s next policy decision. Investors continue to balance persistent inflation pressures against concerns over rising U.S. government debt and questions surrounding central bank independence.

The Japanese yen strengthened slightly, with USD/JPY falling 0.1% to 158.97. The currency remained stronger than levels that triggered joint U.S.-Japan intervention last month. Expectations that the Bank of Japan could raise interest rates as early as September also supported the yen.

Meanwhile, the Australian dollar climbed 0.3% to $0.718, its strongest level since early June. Australia’s consumer price index rose 1.0% in July, exceeding forecasts for a 0.8% increase. Annual inflation eased to 3.5% from 3.8%, while the RBA’s closely watched trimmed mean inflation rose 0.5% monthly, keeping annual core inflation at 3.6%. The figures boosted market bets on a fourth RBA rate hike this year.

Elsewhere, Asian currencies showed limited direction as easing Middle East tensions supported broader risk sentiment. Brent crude dropped more than 2% to around $86.70 per barrel after Iran resumed talks with Oman over the Strait of Hormuz.

The Chinese yuan and Indian rupee were largely unchanged, while USD/KRW rose 0.2% and USD/SGD gained 0.1%.