SINGAPORE, Aug 26 — The dollar made tepid gains but remained range-bound in Asian trading on Wednesday, with investors awaiting United States (US) inflation data later that will set the tone ahead of the Jackson Hole symposium beginning later this week.
Against a basket of six currencies, the US dollar was up 0.1 per cent at 98.988, near the top of the narrow trading range it has sat in for the past week. The currency has drifted around a three-month low following moves by the US Treasury Department to cap US long-term bond yields last week.
In a research report, Standard Chartered analysts wrote that the greenback "is likely to suffer near-term on the back of an incongruous intervention strategy".
"The desire to get US rates lower may present another headwind to the dollar and encourage more appetite for carry trades," they said.
Meanwhile, the Australian dollar climbed 0.3 per cent to US$0.7183, its highest level in three months, after data showed the trimmed-mean Consumer Price Index gauge, the Reserve Bank of Australia's (RBA) preferred measure of cost-of-living pressures, rose at a quicker-than-expected rate of 3.6 per cent year-on-year.
"With underlying inflation showing no signs of slowing, there is still a risk that the RBA will deliver another rate hike over the coming months," Capital Economics analysts wrote in a research note.
Traders are focused on the release of US Personal Consumption Expenditures (PCE) data for July later in the day, ahead of US Federal Reserve (US Fed) chairman Kevin Warsh’s keynote speech at Jackson Hole on Friday.
DBS analysts wrote that his speech "remains the most important event this week. Warsh faces a difficult balancing act: defending the US Fed’s independence and price-stability mandate while providing greater clarity on the US Fed’s reaction function without abandoning his preference for less forward guidance."
Oil prices extended their recent slide on Wednesday, with Brent crude futures down 1.8 per cent at US$86.99 after Iran said it had restarted talks with neighbour Oman to manage the Strait of Hormuz and diplomatic negotiations between Washington and Tehran remained stalled.
The US dollar also climbed 0.1 per cent against the Canadian dollar to C$1.3861 per dollar, extending its gains against the loonie into a third consecutive day after Ottawa hit back on Tuesday with retaliatory tariffs on about US$20 billion worth of U.S. annual imports and rolled out aid for businesses and workers, after trade talks with Washington collapsed last week.
The New Zealand dollar was down 0.4 per cent at US$0.5954, encountering resistance after rallying ahead of an interest rate decision from the Reserve Bank of New Zealand next Wednesday. According to LSEG data, the market overwhelmingly expects the central bank to hike interest rates by 25 basis points to 2.75 per cent.
Against the yen, the US dollar was down 0.2 per cent at 158.98 yen, remaining firmly below levels that triggered joint intervention by US and Japanese officials in the past month. Influential currency investor Stephen Jen said the joint action marked a "watershed moment" for the currency.
On Wednesday, the Bank of Japan (BOJ) said that Governor Kazuo Ueda will not attend the US Fed's annual Jackson Hole gathering this week due to a schedule conflict. BOJ board member Naoki Tamura will attend on his behalf.
A majority of economists in a Reuters poll said the BOJ will likely move more swiftly than previously expected and raise interest rates again in September, with the terminal rate also likely to be higher.
The euro was down 0.1 per cent at US$1.1661 after three sources told Reuters that European Central Bank policymakers are ready to raise interest rates at their next meeting in September but have little appetite to signal further tightening after that. The British pound slipped by a similar magnitude to US$1.3631.
Against the Chinese yuan, the US dollar was flat at 6.7203 yuan in offshore trade, the strongest level for the Chinese currency in 3-1/2 years.
Cryptocurrencies continued to roar back to life as investors revived dollar debasement trades. Bitcoin climbed one per cent to US$79,005.72, while ether was up 1.1 per cent at US$2,462.85. So far this month, they are up 25 per cent and 32 per cent, respectively.
However, gold slipped 0.4 per cent to US$4,639.44, paring its monthly gains to 14.7 per cent.
