By Zhang Mengying
Investing.com – The dollar was down on Tuesday morning in Asia, but still stood near a fresh 20-year peak as investors look to more aggressive interest rate hikes from U.S. Federal Reserve.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.03% to 104.930 by 1:04 AM ET (5:04 AM GMT).
The USD/JPY pair edged up 0.17% to 134.63. As the yen fell to 24-year lows against the dollar, Japan Finance Minister Shunichi Suzuki said the government will coordinate any appropriate steps with the Bank of Japan (BOJ) on Tuesday.
“The failure to break through, despite the huge surge in U.S. 10-year yields, is telling,” Spectra Markets' Brent Donnelly told Reuters.
“Sell dollar/yen here with a stop at 135.55, looking for a move to 130.55.”
The AUD/USD pair gained 0.40% to 0.6951, and the NZD/USD pair jumped 0.34% to 0.6280.
The USD/CNY pair was down 0.26% to 6.7372, while GBP/USD pair gained 0.35% to 1.2177.
The U.S. consumer price index (CPI) rose to 8.6% in May year-on-year, a fresh 40-year high. Investors are priced for a 93% chance that the Fed will raise 75 basis points for interest rates at its June policy meeting this Wednesday.
Asian stocks tumbled over the recession worries brought by the policy tightening, following a slip in U.S. equities.
“The market was over-invested in the idea that inflation has peaked,” Societe Generale strategist Kit Juckes told Reuters.
“The policy challenge is that the Fed has no idea how much monetary tightening is needed and will only find out it has done too much, long after the event.”
Moves from central banks to tame global inflation are still on Investor’s radars. The Bank of England will hand down its policy decision on Thursday, while the BOJ will hand it down on Friday.
On the data front, the U.S. producer price index (PPI) is due on Tuesday, and China's key economic activity data is due the day following.