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Investing.com— Most Asian currencies kept to a tight range on Tuesday, remaining under pressure from a strong dollar amid heightened speculation over the path of U.S. interest rates and President-elect Donald Trump\u2019s plans for trade tariffs.\u00a0<\/p>\n
Anticipation of key inflation data this week kept traders largely biased towards the greenback, especially as recent labor data furthered the case for a slower pace of rate cuts by the Federal Reserve.\u00a0<\/p>\n
This trend kept traders largely averse towards risk-driven Asian markets, especially in the face of higher-for-longer U.S. rates. Uncertainty over stimulus measures in China and the Bank of Japan\u2019s plans for rate hikes also weighed on regional markets.<\/p>\n
The dollar index<\/span> and dollar index futures<\/span> both rose slightly on Tuesday after clocking mild losses in overnight trade.\u00a0<\/p>\n Traders were watching for more insight into Trump\u2019s plans for trade tariffs when he takes office next week. A Bloomberg report said Trump\u2019s team was planning to propose a gradual imposition of tariffs to increase leveraging power and lessen the inflationary shocks of any tariffs.\u00a0<\/p>\n While the report did ease some concerns over Trump\u2019s tariff plans, it still remained to be seen whether the President-elect will adopt a staggered path for the duties. Trump has vowed to impose steep tariffs on several countries, including a 60% duty on China, from \u201cday one\u201d of his term.<\/p>\n On the rates front, focus this week is squarely on consumer price index<\/span> inflation data for December, due on Wednesday. Any signs of inflation having remained sticky are likely to boost the dollar and rattle Asian currencies.<\/p>\n The Japanese yen weakened on Tuesday, with the USD\/JPY<\/span> pair rising 0.1% and largely reversing initial losses.<\/p>\n The yen had firmed marginally after BOJ Deputy Governor Ryozo Himino said that the central bank will debate whether to raise interest rates at a meeting next week.<\/p>\n Speculation over more rate hikes by the BOJ grew in recent weeks, following strong wage growth and household spending data. Japanese inflation has also consistently remained above the BOJ\u2019s 2% annual target in recent months.\u00a0<\/p>\n Broader Asian currencies were largely muted, as traders remained biased towards the dollar before this week\u2019s inflation data. Several Fed officials are also set to speak in the coming days.\u00a0<\/p>\nJapanese yen takes little support from rate hike comments<\/strong><\/h2>\n