Investing.com– Most Asian currencies strengthened slightly on Tuesday, while the dollar deepened from recent yearly highs on persistent bets that the Federal Reserve will cut interest rates in December.

Regional markets were also waiting this week for more economic signals from China and Japan, as well as purchasing managers’ index readings from major economies.

Most Asian currencies posted keen losses last week as powerful U.S. inflation readings and less dovish comments from the Federal Reserve raised uncertainty about how much interest rates will fall in the coming months.

Donald Trump’s election victory also caused investors to massively invest in the dollar, reaching the highest level in a year.

But on Tuesday, indexes and fell 0.1% each, moving away from recent highs as markets stuck to bets that rates would fall in the compact term.

Traders estimated a 59.8% chance of a 25 basis point cut in December and a 40.2% chance that rates would remain unchanged.

This concept provided some relief to Asian markets, although the long-term outlook for interest rates remained uncertain, especially in the wake of the Trump presidency.

The Chinese yuan is weakening in the face of the upcoming decision of the LPR

The Chinese yuan was little changed on Tuesday, with the pair remaining within the range of recent three-month highs.

The focus this week is on the People’s Bank of China’s interest rate decision, although economists expect the central bank to leave interest rates unchanged on Wednesday.

The Bank of China cut its interest rate slightly more than expected in October in an effort to further loosen monetary conditions and support local economic growth. Wednesday’s decision also came after a series of unsatisfactory stimulus measures from China, while recent economic readings showed little improvement.

Japanese yen delicate ahead of CPI data

The Japanese yen strengthened slightly on Tuesday, with the pair falling 0.4%. However, the pair has remained within sight of near four-month lows reached in early November as a keen rise in the dollar weakened the yen.

Data from Japan will be released next Friday and is expected to provide greater insight into interest rates in the country. The reading also comes after largely disappointing third-quarter data that raised questions about how much room the Bank of Japan has to raise interest rates further.

Broader Asian currencies traded in a flat to low range. The Australian dollar pair rose 0.2% after the central bank’s plans to keep interest rates unchanged for the foreseeable future were maintained at a recent meeting of the Reserve Bank of Australia.

The Singapore dollar pair remained unchanged, as did the South Korean won pair.

The Indian rupee pair was unchanged after hitting a series of all-time highs above Rs 84.6 in early November and remained within sight of those highs.