Asian currencies and the US dollar were flat on Friday, as investors remained on the sidelines ahead of the release of the US Consumer Price Index and digested the latest Japanese inflation and manufacturing activity data.
The US dollar index, which measures the greenback against a basket of major currencies, edged up 0.1%, putting it on track for a 0.6% gain this week. US dollar index futures also rose 0.1% as of 04:58 GMT.
The US Consumer Price Index is due to be released soon, and Trump will meet with senior Chinese leaders next week.
The US Consumer Price Index report, previously delayed due to the ongoing government shutdown, will be released later on Friday and is expected to have a key impact on expectations for next week’s Federal Reserve policy meeting.
The Fed is widely expected to cut interest rates by 25 basis points due to a cooling labor market.
“Consensus forecasts call for a month-over-month increase in headline prices of around 0.4% and a month-over-month increase in core prices of around 0.3%,” ING analysts said in a note.
“The impact of tariffs may begin to become more pronounced, but given the Fed’s primary concern is a cooling labor market, this does not preclude a 25 basis point rate cut later this month.”
Investors were reluctant to take major action ahead of the data, keeping most Asian currencies trading in a tight range.
In China, the onshore yuan was essentially flat against the dollar, while the offshore yuan edged up 0.1%.
The South Korean won rose 0.1%, and the Singapore dollar also inched higher.
The Indian rupee edged down 0.1%. The Australian dollar fell 0.2%.
Meanwhile, the White House said US President Trump will meet with China’s top leader at an event in Seoul, boosting hopes for progress in Sino-US trade relations.
Japan’s consumer price index (CPI) accelerated in September; October’s PMI data was weak. Data released Friday showed that Japan’s core consumer price index (CPI) rose 2.9% in September from a year earlier, while the core inflation measure excluding food and energy rose 3.0%.
These figures, still above the Bank of Japan’s 2% target, fueled market expectations that policymakers may further discuss eventual policy tightening measures.
Separately, Japan’s manufacturing activity fell to its lowest level in 19 months in October, indicating a continued contraction in factory output. The services PMI also slowed, but remained robust, supported by strong domestic demand.
“Japan’s core inflation rate remains above 3%, which may support the Bank of Japan’s policy normalization efforts. While a split vote is possible at the October meeting, it is unlikely to materialize,” ING analysts said in a separate report.
“We now believe a December rate hike is more likely,” they added.
