Asia FX Shows Limited Movement, Dollar Remains Subdued Amid Persistent Rate-Cut Expectations

Jan 12, 2024: Most Asian currencies experienced minimal changes on Friday, and the dollar exhibited little strength as traders continued to anticipate U.S. interest rate cuts in the face of a stronger inflation reading for December. Positive data from China also contributed to the sentiment in the region, with Chinese exports surpassing expectations, and the Consumer Price Index (CPI) inflation slightly increasing in December. The Chinese yuan saw a 0.1% rise, while the Australian dollar, closely tied to China’s trade, gained 0.3%. The Japanese yen strengthened by 0.3%, rebounding after a notable recovery against the dollar on Thursday, with expectations that the Bank of Japan will maintain its ultra-dovish stance later this month.