Investing.com — Most Asian currencies rose Tuesday as investors welcomed signals of more stimulus from China, while the Australian dollar fell sharply after the country’s central bank held rates steady and struck a less aggressive chord.
Gains in regional currencies were limited as investors were cautious ahead of a key U.S. inflation reading, which could provide more clues about the Federal Reserve’s interest rate outlook before it meets next week.
Australian dollar falls after RBA decision
The Australian dollar pair fell 0.7% to hover around a four-month low after the Reserve Bank of Australia held steady at 4.35% at its December policy meeting, citing persistent underlying inflation and a tight labor market.
The central bank said some upside risks to inflation had diminished and it was growing more confident that inflation was moving towards its target range. But the country still expects inflation to fall only within the target range of 2% to 3% in 2026.
The RBA’s comments were seen as slightly less aggressive, especially as recent gross domestic product data showed growth slowed sharply in the September quarter.
ANZ analysts called Tuesday’s decision a “softening step” and reiterated their call for the RBA to start cutting interest rates by May 2025.
The Chinese Yuan Rises Amid Momentum Cheers
The Chinese yuan’s offshore pair fell 0.2% on Tuesday, while the onshore pair rose 0.1%.
China has committed to implementing more proactive fiscal stimulus and moderately loosening monetary policy in 2025, the government announced at a Politburo meeting on Monday.
Other regional currencies saw some bids on hopes of improving economic activity in China. The focus has now been on China’s Central Economic Work Conference, which will start on Wednesday and is likely to provide more clues about planned stimulus measures.
But trade data from China was disappointing. While the country rose in November, both were weaker than expected.
The Singapore dollar pair fell 0.2%, while the Philippine peso pair was largely unchanged.
The South Korean won pair edged lower after rising as much as 1% in the previous session. A slew of government measures aimed at stabilizing local markets helped allay some of the concerns over the country’s ongoing political crisis, which has battered winners in recent sessions.
The Thai baht pair fell 0.3%, while the Indian rupee pair was largely muted.
Dollar stable ahead of US inflation
The , and the , were largely stable in Asian trading.
Market participants are cautiously awaiting November inflation data, due Wednesday, to further gauge the Fed’s interest rate trajectory.
The Fed is expected to cut rates by 25 basis points at its December meeting, scheduled for next week.
