Most Asian currencies firmed on Wednesday as the dollar extended recent declines ahead of key payrolls data due later in the day, while the Chinese yuan moved little on softer-than-expected January inflation data.
The Australian dollar was a standout performer in the region, surging to a three-year high following more hawkish signals from Reserve Bank of Australia officials.
The Japanese yen also firmed, extending recent gains after Prime Minister Sanae Takaichi’s landslide victory in Japan’s lower house. Japanese markets were closed for a holiday.
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Chinese yuan steady after soft Jan inflation The Chinese yuan’s USD/CNY pair hovered around 6.91 yuan on Wednesday, remaining close to its lowest level since May 2023.
The yuan showed little reaction to consumer price index inflation data reading weaker than expected for January. Producer price index inflation data also showed another month of contraction, indicating that China’s disinflationary trend remained squarely in place.
The data was in part skewed by China’s Lunar New Year holiday taking place later this year. The break– which is usually characterized by heavy consumer spending– had landed in late-January in 2025, and had boosted inflation during that month.
The Lunar New Year holiday will be an extended, nine-day break in 2026, starting from February 15.
Still, Wednesday’s data underscored the need for more stimulus from Beijing, especially as producer prices contracted for a 40th consecutive reading.
Australian dollar hits 3-yr high on hawkish RBA comments The Australian dollar’s AUD/USD pair was a standout performer on Wednesday, surging 0.7% to $0.7125– its strongest level in three years.
The currency was buoyed by more hawkish comments from the RBA. Deputy Governor Andrew Hauser said during an address on Wednesday that inflation still remained too high, and that interest rates were not restrictive enough to offset this trend.
His comments came just a week after the RBA hiked rates by 25 basis points– its first such move in two years, as the central bank grapples with a late-2025 resurgence in inflation.
Hauser’s comments also seemed to suggest that the RBA could hike rates again this year– a notion that supported the Aussie. Investors are now waiting for first-quarter inflation data to help gauge whether more rate hikes are in the cards.
Dollar softens ahead of payrolls data, Asia FX buoyant The dollar index and dollar index futures fell between 0.1% and 0.2% in Asian trade, extending losses from earlier this week.
Fresh pressure on the dollar came from softer-than-expected retail sales data for December, which drummed up concerns over slowing consumer spending and economic growth.
The print was the first in a line of U.S. economic readings scheduled for this week, with nonfarm payrolls data for January due later on Wednesday. Any signs of more labor market weakness are likely to further pressure the dollar.
