Investing.com– Most Asian currencies moved little on Wednesday, while the dollar steadied as traders hunkered down before a barrage of cues on U.S. interest rates from the Federal Reserve and key inflation data. 

Sentiment towards Asia was dented by fears of renewed U.S.-China trade tensions, after media reports said the White House was planning stricter curbs on chip sales to Russia, which could impact Chinese resellers. 

Middling Chinese inflation data also raised concerns over a sluggish economic recovery in the country. 

Chinese yuan muted amid trade ructions, middling inflation 

The Chinese yuan’s pair hovered close to six-month highs on Wednesday, as reports of increased U.S. trade scrutiny dented sentiment. The reports come just weeks after the U.S. implemented increased tariffs on several key Chinese industries. 

Mixed Chinese inflation data also raised some concerns over an economic recovery in the country. While inflation shrank at its slowest pace in 15 months in May, inflation grew less than expected, barely staying out of contraction territory.

The reading indicated that consumer spending- which is a key driver of the Chinese economy- remained weak, even as factory activity picked up.

Broader Asian currencies were all nursing recent declines against the dollar, as uncertainty over U.S. interest rates kept traders biased towards the greenback.

The Japanese yen’s pair rose slightly and remained well above 157 yen. The currency took little support from hotter-than-expected , which came just before a Bank of Japan meeting this week.

The BOJ is set to meet on Friday and is likely to . But the central bank is also expected to tighten policy further by reducing its pace of bond purchases. 

The Australian dollar’s pair rose 0.1%, while the South Korean won’s pair tread water, as did the Singapore dollar’s pair. 

The Indian rupee’s pair hovered close to record highs, as recent volatility, in the wake of a surprise result for the 2024 general elections, battered the rupee. 

Dollar muted with Fed meeting, CPI data 

The and steadied near one-month highs on Wednesday, having rebounded in recent sessions in anticipation of Wednesday’s cues. 

The Fed is widely expected to , and could present a more hawkish stance on the path of rates, citing recent stickiness in inflation and strength in the labor market. 

Before the Fed’s decision, data for May is due on Wednesday. The reading is also expected to show inflation remained sticky in May, giving the Fed little impetus to begin trimming rates.

The prospect of high U.S. interest rates has been a major weight on Asian markets over the past year.