Asian Currencies Weaken as Dollar Holds Steady Ahead of Inflation Data

Asian Currencies Vulnerable

Expectations for Fed’s Rate Cuts

Most Asian currencies saw a decline on Friday, while the dollar remained stable, awaiting crucial inflation data that could influence the Federal Reserve’s decision on interest rate adjustments.

Dollar’s Rollercoaster ride

Impact of U.S. GDP Data

The dollar experienced fluctuations after disappointing U.S. gross domestic product figures, offering temporary relief to Asian currencies, but long-term bets on higher U.S. interest rates kept the dollar’s losses in check.

Strong Performance of Japanese Yen

The Japanese yen faced challenges as it reached new 34-year highs against the dollar, following uncertain signals from the Bank of Japan regarding future interest rate hikes.

The BOJ’s mixed messages created doubts about its rate-increasing capacity, weighing on the yen’s strength.

Broader Impact on Asian Markets

Asian Currency Trends

Other Asian currencies also weakened due to concerns about prolonged U.S. interest rates, with the Chinese yuan maintaining its position near recent five-month highs.

Regional Currency Movements

Diverse Performance Among Asian Currencies

In South Korea, the currency saw a 0.4% increase, while the Singapore dollar rose by 0.1%. The Australian dollar benefited from robust inflation data, leading to speculations of sustained higher rates.

The Indian rupee remained stable amidst market volatility as the country’s general elections commenced.

Anticipation for Inflation Data

Traders closely monitored U.S. inflation data, the Federal Reserve’s preferred gauge, following the disappointing U.S. GDP report. Despite uncertainties, investors leaned towards postponing rate cuts until later in the year.

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