Investing.com-- Most Asian currencies inched higher on Wednesday as the dollar weakened ahead of a key U.S. inflation reading, while focus turned to China’s annual economic policy meeting for clues on new stimulus measures from the world’s second largest economy.
Investors were cautious ahead of U.S. consumer price index data, due later in the day, which is likely to factor into the Federal Reserve's plans for interest rates. Uncertainty over the long-term outlook for rates spurred some strength in the dollar, pressuring Asian currencies in recent weeks.
The dollar Index lost 0.1%, while dollar index futures also ticked lower in Asian trade on Wednesday.
Chinese yuan rises with CEWC in focus
The Chinese yuan’s offshore USD/CNH pair fell 0.2% on Wednesday, while the onshore USD/CNY pair was largely unchanged. Both pairs fell in the previous session after China's Politburo offered its most dovish signals yet on plans to unlock more stimulus and support growth.
Focus was now on China’s Central Economic Work Conference (CEWC), a two-day meeting starting later in the day. The CEWC serves as a barometer for how China will address internal challenges like slowing growth, weak consumption, and external pressures such as trade tensions.
The annual meeting is a pivotal event not only for China but for the broader Asia region, as China is the largest trading partner for many Asian nations, and its economic health directly impacts regional growth.
The Singapore dollar’s USD/SGD pair edged up 0.1%, while Indian rupee's USD/INR pair was slightly lower.
The Australian dollar's AUD/USD pair inched slightly higher, after falling sharply on Tuesday when the country’s central bank held interest rates steady, and struck a slightly dovish stance.
South Korea's USD/KRW pair inched 0.1% lower, after four consecutive sessions of gains amid an ongoing political crisis in the country.
President Yoon Suk Yeol is under criminal investigation for insurrection following his controversial declaration of martial law earlier this month. South Korean police raided the president's office on Wednesday during its investigation.
Japanese yen rises on BOJ rate hike speculation
The Japanese yen’s USD/JPY pair fell 0.4% on Wednesday after data showed that Japan's wholesale inflation increased for the third consecutive month in November, as businesses faced higher labor and raw material costs.
The reading highlighted growing pressure on the Bank of Japan to consider raising interest rates again, amid sticky inflation.
Markets are split over whether the BOJ will raise interest rates again, ahead of its two-day policy meeting ending on Dec. 19. The central bank raised rates twice this year on a pick-up in inflation and wages, although momentum in the two has somewhat slowed in recent months.