By Gina Lee
Investing.com – The dollar was up on Tuesday morning in Asia, but was subdued as investors continue to gauge inflationary pressures ahead of a policy decision from the U.S. Federal Reserve.
The U.S. Dollar Index Futures that tracks the greenback against a basket of other currencies edged up 0.13% to 90.062 by 12:58 AM ET (4:58 AM GMT). The index was not far from 89.533, a four-and-a-half-month low touched in May.
The USD/JPY pair edged up 0.16% to 109.41. Japan’s GDP, released earlier in the day, contracted 1% quarter-on-quarter and 3.9% year-on-year for the first quarter of 2021.
The AUD/USD pair edged down 0.14% to 0.7742. Data released earlier in the day in Australia said that the National Australia Bank (NAB) Business Confidence Index climbed to 20 in May while the NAB business survey also rose to 37. Across the Tasman Sea, the NZD/USD pair was down 0.21% to 0.7215.
The USD/CNY pair inched down 0.05% to 6.3929 and the GBP/USD pair edged down 0.14% to 1.4158.
Investors are still digesting the U.S. employment report for May, released during the previous week. The report said that non-farm payrolls increased by 559,000 which was well short of the 650,000 number in forecasts prepared by Investing.com.
"It's not that the payrolls numbers were weak. But because so much expectation had been built up in advance, the dollar suffered a bit of setback," Barclays (LON:BARC) senior currency strategist Shinichiro Kadota told Reuters.
The data saw U.S. bond yields stay near their recent lows that also weighed on the greenback.
Investors now await the consumer price index report, due later in the week, to gauge the Fed’s next move ahead of its policy decision to be handed down in the following week.
The Fed is now expected to unveil plans to start tapering assets later in 2021, with the actual process to start in early 2022.
The European Central Bank, whose policy decision will be handed down on Thursday, is also on investors’ radars.
In Latin America, the Mexican peso held firm at 19.832 against the dollar, near its highest level since late January 2020. The country’s midterm elections gave President Andres Manuel Lopez Obrador's MORENA party a reduced majority but confirmed MORENA’s spot as the strongest party in the country.
Elections had the opposite effect on the Peruvian sol, which fell to an all-time low of 3.9367 per dollar. Although socialist Pedro Castillo had a small lead over right-wing rival Keiko Fujimori as the votes from the country's presidential election are counted, the latter has yet to concede the election.