Investing.com — Most Asian currencies rose slightly on Tuesday, while the dollar retreated further from recent one-year highs amid continued bets that the Federal Reserve will cut interest rates in December.
Regional markets also braced for more economic signals from China and Japan this week, as well as a slew of purchasing manager indices from major economies.
Most Asian currencies suffered steep losses last week as strong US inflation data and less dovish statements from the Federal Reserve led to some uncertainty about how much interest rates will fall in coming months.
Donald Trump’s election victory also prompted traders to flock to the dollar, pushing it to a one-year high.
But yields fell 0.1% each on Tuesday, retreating further from recent highs as markets held on to expectations that rates would fall in the near term.
Traders were pricing in a 59.8% chance of a 25 basis point cut in December, and a 40.2% chance of it remaining unchanged, it showed.
This idea provided some relief for Asian markets, although the long-term outlook for interest rates still remained uncertain, especially in light of the Trump presidency.
Chinese Yuan Muted as LPR Decision Looms
The Chinese yuan moved little on Tuesday, with the pair staying within sight of recent three-month highs.
The focus this week is on an interest rate decision by the People’s Bank of China, although economists expect the central bank to leave this interest rate decision unchanged on Wednesday.
The PBOC cut rates slightly more than expected in October as it looked to further ease monetary conditions and support local economic growth. Wednesday’s decision also comes after a slew of disappointing stimulus measures from China, while recent economic data showed little improvement.
Japanese Yen Vulnerable Against CPI Data
The Japanese yen firmed slightly on Tuesday, with the pair down 0.4%. But the pair remained within sight of a nearly four-month low reached earlier in November, when a spike in the dollar dented the yen.
Japanese data are due out this Friday and are expected to provide more insight into interest rates in the country. The figures also come after largely disappointing third-quarter figures, which raised questions about how much room the Bank of Japan has to raise rates further.
Broader Asian currencies moved from flat to low. The Australian dollar pair rose 0.2% after the recent Reserve Bank of Australia meeting reiterated the central bank’s plans to keep interest rates unchanged in the near term.
The Singapore dollar pair was flat, as was the South Korean won pair.
The Indian rupee pair was flat after hitting a series of record highs above 84.6 rupees earlier in November, remaining within sight of those peaks.
