Still, gains across regional currencies were limited, with most units remaining squarely within a trading range established over the past two months. The greenback also remained in sight of a recent three-month high.
The Japanese yen was among the better performers for the day, rising 0.2% from its weakest level in over three months after consumer price index inflation read slightly higher than expected for January.
While the reading still showed a retreat in inflation, it factored into growing expectations that the Bank of Japan will raise interest rates by as soon as April.
The BOJ is widely expected to end its yield curve control and negative interest rate policies this year, with sticky inflation potentially giving the central bank more impetus to do so sooner than later.
But worsening economic conditions in Japan may potentially delay the BOJ’s plans, especially as the economy unexpectedly fell into recession in the fourth quarter.
Broader Asian currencies were mildly higher for the day, with a string of regional economic readings on tap. The Australian dollar rose 0.1% before a monthly CPI inflation reading, due on Wednesday.
The New Zealand dollar fell 0.2% before a Reserve Bank meeting where the RBNZ is widely expected to hold interest rates and flag more potential hikes, amid sticky inflation.
The Chinese yuan was flat before a string of key purchasing managers index (PMI) readings due this Friday, which are expected to shed more light on Asia’s biggest economy.
The South Korean won and Singapore dollar rose slightly, while the Indian rupee was flat, but traded well above record-low levels.
The dollar index and dollar index futures both fell 0.1% each in Asian trade on Tuesday, with the greenback losing some ground in anticipation of key economic data.
PCE price index data- which is the Fed’s preferred inflation gauge- is due on Thursday and is expected to factor into the central bank’s plans for interest rates.
Before that, a second reading on fourth-quarter U.S. GDP is also due on Wednesday.
Relative resilience in the U.S. economy and inflation saw the Fed signal that it was in no hurry to begin trimming interest rates early this year, which bodes well for the dollar but poorly for Asian currencies.
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