The Australian dollar weakened against other major currencies in the Asian session on Wednesday, as the weaker inflation data from Australian economy fueled bets on rate cuts from the Reserve Bank of Australia in 2024.

Data from the Australian Bureau of Statistics showed that the consumer prices in Australia were up 4.1 percent on year on year in the fourth quarter of 2023. That was shy of expectations for an increase of 4.3 percent and down from 5.4 percent in the previous three month.

On a seasonally adjusted quarterly basis, inflation rose 0.6 percent, again missing forecasts for 0.8 percent and down from 1.2 percent in the three months prior.

Data from the National Bureau of Statistics showed that the manufacturing sector in China continued to contract in January, albeit at a slower pace, with a manufacturing PMI score of 49.2. That's up from 49.0 in December, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

The non-manufacturing index improved to 50.7 in January, the NBS said - up from 50.4 in the previous month.

The Asian stock markets also traded lower, as traders became cautious and look ahead to the U.S. Fed's interest rate decision later in the day. The Fed is widely expected to leave interest rates unchanged, but the accompanying statement could have a significant impact on the outlook for interest rates. They also react to a slew of economic data from the U.S., China, Australia and Japan.

In other economic news, data from the Reserve Bank of Australia showed that the total private sector credit in Australia was up 0.4 percent on month in December, unchanged from the November reading. On a yearly basis, private sector credit gained 4.8 percent.

In the Asian trading today, the Australian dollar fell to nearly a 2-week low of 96.83 against the yen, from yesterday's closing value of 97.43. The aussie may test support near the 95.00 region.

In economic news, industrial production in Japan was up a seasonally adjusted 1.8 percent on month in December, the Ministry of Economy, Trade and Industry said in Wednesday's preliminary report. That missed expectations for an increase of 2.4 percent after slipping 0.9 percent in November. On a yearly basis, industrial production was down 0.7 percent.

Against the U.S. dollar and the euro, the aussie dropped to an 8-day low of 0.6559 and a 2-day low of 1.6500 from Tuesday's closing quotes of 0.6601 and 1.6423, respectively. If the aussie extends its downtrend, it is likely to find support around 0.63 against the greenback and 1.67 against the euro.

Against the Canada and the New Zealand dollars, the aussie slipped to more than 2-week lows of 0.8801 and 1.0727 from yesterday's closing quotes of 0.8843 and 1.0756, respectively. The next possible upside target for the aussie is seen around 0.87 against the loonie and 1.06 against the kiwi.

Looking ahead, Germany's unemployment data, flash consumer and harmonized consumer price data, all for January, are due to be released in the European session.

In the New York session, U.S. MBA mortgage approvals data, German CPI data for January, U.S. jobs data for January, Canada GDP data for December, U.S. Chicago PMI for January and U.S. EIA crude oil data are set to be published.

At 2:00 pm ET, the U.S. Federal Reserve will conclude its two-day monetary policy. The central bank is widely expected to leave the federal funds rate unchanged.

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