Dollar Gains in Asia before BOJ Review

The dollar caught up in Asia on Tuesday as data facts from Tokyo and China came in weaker than predicted while investors waited on a central bank review in Japan.

The U.S. dollar index, which is used to measure the greenback’s strength against a basket of 6 other major currencies, rose 0.11 percent to 94.48.

USD/JPY tumbled 0.03 percent to 113.15, as AUD/USD dropped to 0.7682, down 0.08 percent. EUR/USD slid 0.10 percent to 1.1638, and GBP/USD fell 0.09 percent to 1.3196.

Australia’s private sector credit rose 0.3 percent for September, compared with a 0.5 percent gain seen on a month. China’s report regarding the official manufacturing PMI for October showed at 51.6, which was a slightly lower outcome compared to the expected 52, with its non-manufacturing survey also lower at 54.3, compared to last month’s 55.4.

In Japan, household spending rose 0.4 percent for September, surpassing the expected 0.1 percent, but at a 0.3 percent decline on year, missing the 0.7 percent gain expected. The country’s industrial production fell 1.1 percent this month provisionally, which is less than the expected 1.5 percent decline. Japan’s unemployment rate was stable at 2.8 percent.

The Bank of Japan will be ending a two day monetary policy review and is expected to keep policy steady, including 80 trillion yen in annual asset purchases. Other than the review, the BoJ is also expected to release its outlook report and core CPI estimates, as well as housing starts and construction orders.

The dollar fell against a group of major currencies overnight as data showed inflation continued to be subdued ahead of the Federal Reserve’s two day policy meeting scheduled on Tuesday.

The greenback came under pressure right as it’s about to post its best weekly gain of 2017. Investors began to ponder data from reports that showed inflation continued to falter while consumer spending reached its biggest monthly increase since 8 years ago.

PBOC Sets Yuan Parity against Dollar

Tuesday, the People's Bank of China set the Yuan parity rate against the dollar at 6.6397, compared to the previous close of 6.6460.

The China Foreign Exchange Trade System gives the weighted average of prices set by market makers, excluding the highest and lowest offers from the calculation.

The central bank allows the dollar/yuan rate to move no more than 2% above or below the central parity rate.

A yuan level of 7 against the dollar, USD/CNY, as a key touchstone for sentiment in the near term is expected by the market watchers.

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