Investing.com– Most Asian currencies were little changed on Tuesday, while the dollar gained ahead of key inflation data that is likely to impact the outlook for U.S. interest rates.

Most regional currencies saw some declines in the past week as concerns about a worsening global economic situation dampened risk appetite.

But anticipation of U.S. interest rate cuts helped limit overall losses and also held back the dollar’s gains. But the U.S. dollar has attracted some bids this week amid positioning ahead of Wednesday’s inflation reading.

Dollar gains on CPI data, Fed meeting in sight

Both the currency and the U.S. currency were up about 0.1% in Asian trade after posting significant gains on Monday.

Traders supported the U.S. dollar as risk sentiment worsened last week, while anticipation of key inflation data due on Wednesday also spurred inflows into the greenback.

Wednesday’s reading is expected to show a further cooling in inflation in August. The reading also comes just a week before , when the central bank is widely expected to cut interest rates by 25 basis points.

Lower interest rates are expected to weaken the dollar and spur some flows into risk-on Asian markets. But the full extent of such a rotation will depend on how much the Fed cuts rates this year.

Broader Asian currencies were trading in a narrow range, with the Japanese yen hovering around 143.22 yen, having fallen sharply last week on increased demand for safe-haven yen.

The Australian dollar pair fell slightly on tender economic data from the country. A private survey showed consumer confidence deteriorated in early September and remained near the lows seen during the COVID-19 pandemic in 2020, amid growing concerns about an economic slowdown.

The South Korean won pair rose 0.2%, while the Singapore dollar pair was flat. The Indian rupee pair also moved sideways but was within reach of record highs.

China’s yuan weakens on mixed trade data

The Chinese yuan rose 0.1%, with the currency depreciating after mixed trade data for the country was released.

China’s economy unexpectedly grew in August as the country’s industry largely ignored headwinds from trade restrictions imposed by the U.S. and its allies.

However, growth in China was much smaller than expected, raising concerns about tender local demand.

The yuan has already seen some declines in the past week amid a series of disappointing economic data from China.