Oct 10 2024: Most Asian currencies edged higher on Thursday, regaining some ground after recent losses, while the U.S. dollar remained steady near a seven-week peak as markets awaited key consumer inflation data.
The regional currencies had been under pressure due to uncertainty over the pace of future interest rate cuts by the Federal Reserve. However, sentiment improved slightly after the minutes from the Fed’s September meeting indicated broad support for the previous 50 basis point rate cut, even though future rate decisions remained unclear.
A more positive outlook toward China also boosted Asian currencies, as Beijing signaled upcoming fiscal stimulus measures aimed at supporting economic growth.
Dollar Holds Steady with Inflation Data Looming
The dollar index remained close to seven-week highs, with markets focusing on U.S. consumer price index (CPI) data expected later in the day. The data is anticipated to show a slight easing in headline CPI inflation, while core CPI is expected to remain sticky.
Last week’s strong payrolls data reduced market expectations of a 50 bps rate cut by the Fed in November, with traders now forecasting a 79.5% chance of a 25 bps cut.
Yuan Gains on Fiscal Stimulus Hopes
The Chinese yuan strengthened by 0.2%, reversing some of its recent losses as traders looked ahead to potential fiscal stimulus measures from Beijing, following recent monetary easing that had disappointed markets.
Mixed Performance in Other Asian Currencies
Most Asian currencies firmed on Thursday, though they continued to recover from recent losses. The Japanese yen dipped 0.1%, despite stronger-than-expected producer price index data. The South Korean won gained 0.3%, while the Singapore dollar slipped slightly. The Indian rupee remained near record lows, weighed down by signals from the Reserve Bank of India suggesting a shift away from its previously hawkish stance. Meanwhile, the Australian dollar gained 0.2%, supported by optimism over China’s stimulus plans.