Asian currencies consolidated against the US dollar in early Asian trading, with markets holding their breath ahead of key US consumer price index data later today.

At 0128 GMT, the US dollar was 0.2% higher at 1,413.43 won and little changed at 159.31 yen, while the Australian dollar remained flat at US$0.7063, according to LSEG data.

The focus on upcoming inflation figures comes as the Federal Reserve's attention shifts from labor market indicators to price pressures, according to MUFG Bank's Michael Wan. "While the weaker than expected nonfarm payrolls numbers last week help, the CPI numbers later today are arguably more important," the senior currency analyst noted in a research report.

Market participants are particularly attentive to how the CPI data might influence the Federal Open Market Committee's interest rate decision in September. The recent softening in employment data provided some relief to Asian currencies, but the inflation report remains the primary driver of near-term monetary policy expectations. Currency strategists suggest that a stronger-than-expected CPI reading could strengthen the dollar further against regional peers, while a softer print might provide additional upside for Asian currencies.

([email protected])