Mar 4 2024: Most Asian currencies maintained narrow trading ranges on Monday, while the dollar stabilized following recent declines as investors awaited further guidance on U.S. interest rates from the Federal Reserve, along with significant payrolls data scheduled for release this week.
Attention was also directed towards China’s annual congress, where policymakers are expected to unveil additional stimulus measures aimed at bolstering the region’s largest economy.
The dollar index and dollar index futures exhibited minimal movement in Asian trading on Monday, following two consecutive weeks of losses. The greenback had been under pressure amid growing expectations that the Federal Reserve would commence interest rate cuts by June. This sentiment was reinforced by softer-than-expected consumer sentiment data and in-line PCE price index figures over the past week.
Market focus turned to an upcoming testimony by Federal Reserve Chair Jerome Powell, where analysts anticipate a reaffirmation of the central bank’s cautious approach to interest rates. ANZ analysts noted an expectation for Powell to reiterate the need for convincing evidence of inflation reaching the Fed’s 2% target.
Additionally, attention this week is on the release of nonfarm payrolls data for February on Friday, as the labor market’s strength remains a pivotal factor in the Fed’s interest rate decisions.
Anticipation of further cues from the Federal Reserve kept Asian markets range-bound. The Japanese yen hovered around the 150 mark against the dollar, with forthcoming Tokyo inflation data expected to provide insights into the Japanese economy.
The Australian dollar remained steady ahead of fourth-quarter GDP data, which is anticipated to reflect resilience in the Australian economy.
Meanwhile, the Singapore dollar and South Korean won exhibited minimal movement, while the Indian rupee saw slight depreciation after posting gains last week following robust GDP data.
The Chinese yuan traded cautiously on Monday as investors refrained from significant positions ahead of the 2024 National People’s Congress. Expectations are high for Beijing to introduce additional stimulus measures amidst a slowing economic recovery, particularly amid challenges posed by a property market crisis and deflationary pressures. Analysts predict a GDP target of 5% for the year, consistent with 2023.
