Dollar Strengthens Ahead of Key U.S. Labor Data
Asian Currencies Flat as Dollar Gains
Most Asian currencies remained stagnant or weakened on Friday as the dollar maintained its three-week high. Market players eagerly awaited crucial U.S. labor data to gauge the Federal Reserve’s stance on interest rate cuts.
Regional Currencies Set for Weekly Losses
Regional currencies were on track for significant losses in the first week of 2024, with the dollar experiencing a sharp rebound amid uncertainty surrounding the timing of the Fed’s interest rate reductions.
Traders Uncertain About Fed’s Rate Cut Plans
Traders scaled back expectations of an early rate cut by the Fed, causing uncertainty about the scope and timing of potential cuts.
Asia FX Heads for Weekly Losses
The rate-sensitive was among the hardest-hit currencies, poised to lose nearly 3% this week after a series of substantial losses.
Yen Weakest in Three Weeks
The yen hit its lowest level in over three weeks, partly due to the negative sentiment following a devastating earthquake in Japan.
Uncertainty Plagues Asian Currencies
Other Asian currencies were also on track for significant weekly losses as traders reversed a late-2023 rebound in the sector.
Weakness in Yuan Hindered by Stronger Fixes
The was flat on Friday, set to lose 1.5% this week, while the was also headed for a 1.6% weekly loss.
Indian Economy Expected to Outperform
The hovered near record lows before the release of government estimates for gross domestic product in 2024, with the Indian economy projected to grow at over 7%.
Dollar Near Three-Week High
The and remained close to their highest levels since mid-December and were set to add about 1.1% this week, marking their best week since July 2023.
Fedwatch Tool Reflects Lower Expectations
The greenback surged this week as traders sought assurance on the Fed’s potential rate cuts. The CME Fedwatch tool showed reduced expectations for a March 2024 rate cut to 62% from 72% the previous week.
Focus on Key Labor Data
Traders awaited key labor data for December, anticipating signs of cooling in the labor market, which could influence the Fed’s decision on rate cuts.
Uncertain Future for Asia Currencies
Asia currencies had a subdued performance in 2023 due to pressure from high U.S. interest rates, but the trend may change in 2024 as the Fed begins trimming rates.
