Broader Asian currencies largely advanced against a weaker dollar, while also recovering a measure of recent losses

Asian currencies rose on Wednesday, while the U.S. dollar dropped after comments from U.S. central bank Chair Jerome Powell pushed up bets on more interest rate cuts in the coming months.

Powell’s comments helped traders look past simmering trade tensions between China and the U.S., amid a row over rare earth exports and import restrictions.

This trend helped the yuan advance on Wednesday, despite weaker-than-expected inflation data pointing to sustained weakness in the Chinese economy.

The yuan’s USD/CNY pair dropped 0.2% on Wednesday, with the currency also taking support from a substantially stronger midpoint fix by the People’s Bank.

Chinese inflation data released on Wednesday showed consumer prices slid more than expected in September, while producer prices marked their third straight year of deflation.

While there were some green shoots in inflation– especially as core consumer inflation hit a 19-month high– there appeared to be few signs of improvement in China’s long-running deflationary trend.

Beijing is expected to dole out more policy support to shore up growth in the coming months.

Broader Asian currencies largely advanced against a weaker dollar, while also recovering a measure of recent losses.

The yen was an outperformer, as it recovered sharply from steep losses logged through late-September and early-October. Some doubts over Sanae Takaichi’s prime ministership also supported the yen.

The yen’s USD/JPY pair dropped 0.5%, helped by some unwinding in bets on looser fiscal policy under Takaichi. The Liberal Democratic Party leader now faces a potential challenge to her premiership, after LDP coalition ally Komeito withdrew its support.

The South Korean won’s USD/KRW pair declined 0.5% after data showed exports and imports rose sharply in September.

The Australian dollar’s AUD/USD pair gained 0.5%, while the Singapore dollar’s USD/SGD pair shed 0.2%.