Asian Currencies Unchanged, Dollar Poised for Weekly Decline as Fed Rate Cut Bets Rise

Most Asian currencies remained stable on Friday following substantial gains earlier in the week. Meanwhile, the dollar is on track for a significant weekly decrease due to weak labor market data, which has fueled speculation of a potential interest rate cut by the Federal Reserve by mid-2024.

Despite the dollar’s weakness, regional currencies are set for a strong weekly performance. The gains come as Asian currencies recover from multi-month lows, with the being one of the biggest beneficiaries, poised to add 0.6% this week, marking its best weekly gain in over four months.

Bank of Japan Governor Kazuo Ueda emphasized the necessity of maintaining an ultra-dovish stance, offering little immediate relief for the yen. This comes after data revealed that shrank more than expected in the September quarter.

Meanwhile, the stabilized near three-month highs, set to add 1.8% this week, following signs of economic resilience that helped it rebound from a recent one-year low.

Similarly, the edged slightly lower on Friday but is expected to add 1.6% this week. All eyes are now on the of the Reserve Bank’s recent meeting, scheduled for the upcoming week.

On the other hand, the traded sideways on Friday, finding support from improved data showing progress in the country’s key . However, continued weakness in China poses uncertainties for Singapore’s near-term economic prospects.

Chinese Yuan Gains Weekly Traction, Rate Decision Looms

The Chinese yuan remained flat on Friday, heading for a 0.6% weekly gain after recovering from a one-year low. While recent data indicated some resilience in the Chinese economy, other October economic indicators still pointed to consistent weakness, especially as it slipped into .

All eyes are on the People’s Bank of China, which is set to decide on its benchmark on Monday. However, the bank is anticipated to maintain record-low rates as it grapples with balancing economic growth and yuan weakness.

The was among the few outliers this week, declining 0.1% on Friday and remaining close to record lows amid concerns about the Indian economy losing momentum.

Dollar Primed for Weekly Decline Amid Fed Rate Cut Expectations

The and steadied in Asian trade on Friday, while the greenback is poised to lose nearly 1.5% this week. Middling economic readings have fueled speculation that the Fed has concluded its interest rate hikes.

Softer-than-expected for October, coupled with growing more than expected for a fourth straight week, have led to increased bets that the Fed will refrain from raising interest rates.

The of the Fed’s October meeting is expected to provide further insight into the central bank’s outlook.