By Ambar Warrick
Investing.com-- Most Asian currencies sank on Wednesday as a potential Russian missile strike on Poland drove investors away from risk-driven assets, while the dollar steadied from recent losses as investors sought safe haven in the greenback.
Wednesday’s gains saw the dollar brush off data that showed U.S. producer inflation at a 14-month low. The reading gave further credence to bets that inflation has likely peaked in the country, which is expected to elicit a less hawkish stance by the Federal Reserve.
Several Fed members also called for smaller rate hikes, while bets that thein December grew sharply this week.
While this scenario is positive for Asian currencies in the near-term, sentiment was battered on Wednesday as a missile of Russian make killed two people in eastern Poland.
The move, if linked to Russia, would mark the first time since Russia’s invasion of Ukraine that Moscow has attacked a member of the North Atlantic Treaty Organization, and could spark a potential escalation in the conflict.
Risk assets saw steep losses on Wednesday in anticipation of more details on the strike.
More signs of economic duress in China also further soured sentiment towards Asian markets, with data showing Chinese house prices sank to a seven-year low in October.
The country is also struggling with its worst COVID outbreak in six months, which has brewed more uncertainty over its economic prospects.
Losses in the Australian dollar were somewhat tempered by data showing local wages grew more than expected in the quarter to September.
The reading gives the Reserve Bank more headroom to keep raising interest rates .
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