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Asia FX weakens amid China fears, dollar strong after CPI

Most Asian currencies fell on Friday amid persistent fears of an economic slowdown in China, while the dollar firmed after data showed that U.S. consumer inflation grew as expected in July.

Rising U.S. Treasury yields also pressured local currencies, while expectations that the Federal Reserve will keep interest rates higher for longer kept the dollar buoyant.

Data on Thursday showed that U.S. consumer price index (CPI) inflation grew as expected in July from the prior month. While the reading spurred bets that the Fed will keep rates on hold in September, it also saw markets trim their expectations for a rate cut this year, with rates expected to remain at 22-year highs.

This weighed on most risk-driven assets, with investors remaining wary of buying into Asian currencies amid a high U.S. rate outlook.

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