Investing.com–Most Asian currencies stayed within a tight range on Wednesday, while the dollar held steady as it awaited more signals from the Federal Reserve and U.S. inflation on the path of interest rates.
The New Zealand dollar lagged its peers and fell sharply after the Reserve Bank of New Zealand cut rates and took a dovish tone.
Sentiment toward regional currencies was hampered by waning optimism about more stimulus in China, as the government provided few details on its plans to provide more economic support. The yuan also suffered steep losses in the previous session.
Dollar stable with Fed minutes, inflation on track
The and moved little in Asian trading, holding steady near a seven-week high on Monday.
The dollar’s gains came after strong payroll data raised doubts about how much momentum the Fed has to keep cutting rates sharply. Traders were pricing in an 83.2% chance that the Fed would cut rates by 25 basis points in November, and a 16.8% chance that rates would remain unchanged, it showed.
Figures from the Fed’s September meeting – where the central bank cut rates by 50 basis points – will be released later on Wednesday and offer more clues about its plans.
September inflation data will be released later this week and will also likely factor into the Fed’s outlook.
The New Zealand dollar weakens after a rate cut by the RBNZ
The New Zealand dollar pair fell 1% after the RBNZ on Wednesday, striking a dovish tone.
The 50 basis point cut was at the high end of market expectations, with the bank citing softening inflation and economic growth as motivation.
Wednesday’s rate cut is also the RBNZ’s second rate cut this year, with the central bank sending mixed signals on whether rates will fall further.
Chinese Yuan Remains Stable After Sharp Losses; the stimulating cheer diminishes
The Chinese yuan weakened slightly on Wednesday, with the pair rising 0.1%. The pair had risen 0.6% in the previous session when onshore trading resumed after Golden Week.
Sentiment toward China was hampered by Beijing providing few details on how it plans to implement recently unveiled stimulus measures, including interest rate cuts and more liquidity support.
But lower interest rates also mean more headwinds for the yuan.
Broader Asian currencies remained within a tight range, while commodity-linked units such as the Australian dollar weakened on concerns about China. The pair fell 0.2%.
The Japanese yen pair moved little after weakening significantly against the dollar over the past week.
The Indian rupee pair has been hovering around record highs before a , with the central bank widely expected to keep interest rates steady.
