Asia FX weak as dollar climbs to 1-year high on strong currency; Powell is expected by Investing.com
Investing.com– Most Asian stocks were lower on Thursday, while the dollar rose to a one-year high on data showing continued US interest rate hikes, with the focus now on Federal Reserve Chairman Jerome Powell’s upcoming address.
Sentiment in regional markets remained weak after disappointing recent stimulus measures from China, while the prospect of more US protectionism under Donald Trump’s Presidency also kept traders biased against the dollar.
Many Asian currencies have been the biggest losers over the past week in this trade, with the Japanese yen and the Chinese yuan among the worst hit.
Dollar at 1-year high after CPI data; Powell is focused
Both rose about 0.2% in Asian trade, extending sharp overnight gains.
Consumer price index data read in line with expectations for October. But the rate is still up from the previous month, while remaining tight and well above the Fed’s annual target of 2%.
While the reading prompted bets that the Fed will still cut interest rates by 25 basis points in December, the longer-term outlook for rates has grown uncertain.
Trump’s election also raised long-term inflation expectations, betting on more expansionary policies in his second term.
The focus was now on the upcoming address on , later on Thursday, for further signals on interest rates. Powell reiterated the Fed’s data-driven approach to future rate cuts after the central bank cut rates by 25 basis points last week.
Australian dollar down 3-mth after RBA comments, jobs data
The Australian dollar edged lower on Thursday, with the pair down 0.1% to a three-month low.
Reserve Bank of Australia Governor Michele Bullock said interest rates were unlikely to rise again, but would remain stable until the bank was confident inflation was falling further.
Bullock’s comments coincided with data showing Australia cooled in October from six straight months of strong growth. The soft labor market has been fueled by expectations of continued monetary easing, with analysts predicting the RBA will start cutting rates from the first quarter of 2025.
Asian currencies weakened on Thursday and have been reeling from heavy losses in recent sessions. The Japanese yen pair rose 0.3% to 155.85 yen – a more than three-month high. The yen was also close to levels that eventually triggered capital market intervention by the government.
The Chinese yuan pair rose 0.3% and was at a more than three-month high, as the yuan was hit by pressure measures from China. Sentiment towards China was also dampened by the prospect of higher US trade tariffs against the country, under the Trump administration.
The South Korean won pair rose 0.1%, while the Singapore dollar rose 0.2%.
The Indian rupee pair stabilized after hitting a record high of over 84.6 rupees this week.
