Investing.com–Most Asian currencies remained within a tight range on Thursday, while the dollar held steady amid uncertainty over U.S. interest rates, ahead of key economic signals in the coming days.
The Japanese yen suffered extended losses, with the pair hitting new 34-year highs before a Bank of Japan meeting on Friday. The currency pair also breached a level that traders had widely expected to trigger intervention from the Japanese government.
USDJPY exceeds intervention level; BOJ waited
The USDJPY pair rose past the 155 level in overnight trading and held steady around 155.44 in Asian trading.
Traders had widely expected this to act as a threshold for intervention in the foreign exchange market by the Japanese government. But officials only continued with their verbal warnings, while the continued rise in the USDJPY indicated little action had been taken.
The yen’s weakness put a spotlight on an emerging price.
The central bank is widely expected to leave interest rates unchanged on Friday, following a historic rate hike in March.
But the yen’s recent weakness, coupled with expectations of higher wages and firmer inflation, had traders wary of any hawkish signals from the BOJ.
The BOJ could potentially raise its inflation outlook and repeat plans to raise rates further this year – a scenario that could potentially boost the yen.
But the extent to which the yen will recover remained uncertain, as the main point of pressure on the yen – the fear of ever-longer US interest rates – was still in play.
Dollar remains stable with more price signals on tap
Remove ads
.
Trading in Asia remained stable, after a slight recovery in overnight trading.
The dollar remained close to last week’s five-month high as traders steadily priced in expectations of early rate cuts from the Federal Reserve.
The economic figures released this week should provide more indications about interest rate developments. First-quarter US data will be released later on Thursday and will show how resilient the US economy was in early 2024.
The numbers – the Fed’s favorite inflation gauge – due Friday will be more closely watched.
Anticipation of the figures kept most Asian currencies in the background. The South Korean won pair moved little even as the economy showed much stronger than expected growth in the first quarter.
The Singapore dollar pair fell 0.1%, while the Chinese yuan pair treaded water amid a series of strong corrections by the People’s Bank.
The Indian rupee pair hovered below record highs hit earlier in April, with traders remaining wary of the currency as India’s 2024 general election begins this week.
