Asia FX dips as dollar rebounds; Japan bonds sale, Aussie CPI in focus

Investing.com-- Most Asian currencies edged lower on Wednesday as the dollar rebounded on upbeat economic data, while the focus was on the upcoming auction of Japan’s longest tenor bonds amid a recent spike in yields.

Investors also assessed Australia’s consumer price inflation data released on Wednesday, and digested another interest rate cut from New Zealand’s central bank.

The US Dollar Index, which measures the greenback against a basket of major currencies, rose 0.3% in Asia hours, after strong gains a day earlier.

Dollar Index Futureswere also trading 0.3% higher.

Data on Tuesday showed that the U.S. consumer sentiment rose much more above expectations in May.

Japan’s 40-year bond sale in focus amid spike in yields

The Japanese yen weakened further against the greenback, as its USD/JPY pair rose 0.2% on Wednesday. The pair had risen nearly 1% on Tuesday.

This came after a Reuters report on Tuesday stated that Japan’s Ministry of Finance is considering adjusting its government bond issuance plans for the current fiscal year, potentially reducing sales of super-long debt.

Yields on 20-, 30-, and 40-year Japanese government bonds had climbed to record highs before the report, driven by waning demand from key institutional investors such as life insurers.

Focus is now squarely on an auction of Japan’s longest tenor bonds on Wednesday.

Asia FX edges down; Australia CPI, RBNZ rate decision in focus

The Chinese yuan’s onshore USD/CNY and offshore USD/CNH pairs were both trading 0.1% higher on Wednesday.

The Australian dollar’s AUD/USD pair was largely unchanged after trimming earlier losses as data showed that the country’s consumer inflation came in higher than expected for April, casting doubt over future interest rate cuts by the Reserve Bank of Australia. 

Meanwhile, the Reserve Bank of New Zealand on Wednesday cut interest rates by 25 basis points as expected amid global trade tensions and subdued domestic growth.

The Kiwi dollar’s NZD/USD pair rose 0.4%. 

Elsewhere, the South Korean won’s USD/KRW pair was largely steady, while the Singapore dollar’s USD/SGD pair gained 0.1%.

The Indian rupee’s USD/INR pair rose 0.3%.