Investing.com — Most Asian currencies held steady after recent losses on Thursday, with the Japanese yen holding near a three-month low while the dollar remained buoyed by expectations of slower interest rate cuts.
Regional currencies suffered from increased risk aversion in markets as anticipation of a tight US presidential race also kept investors on edge, as did heightened concerns in the Middle East.
Risk aversion benefited the dollar and gold. But the Japanese yen saw little safe-haven demand amid doubts about how much room the Bank of Japan has to keep raising rates.
Broader Asian currencies were also skittish as traders waited for more signals on stimulus in China.
The Japanese yen remains stable despite warnings of interventions
The Japanese yen pair fell slightly on Thursday after rising to a nearly three-month high in the previous session.
The yen gained some support after Japanese government officials warned of “one-sided” moves in the currency markets in light of the yen’s recent weakness. Their comments raised some fears of intervention in the foreign exchange market.
The yen benefited little from weak data, which showed a contraction in business activity in October.
The yen remained vulnerable amid growing doubts about more rate hikes by the BOJ, especially ahead of Sunday’s Japanese general election.
The ruling Liberal Democratic Party may have to seek a coalition to retain power, changing Japan’s political landscape and limiting the BOJ’s ability to make changes to monetary policy.
The BOJ meets next week and is widely expected to keep interest rates steady. This should be expected from Tokyo on Friday.
Dollar strong as yields rise amid bets on smaller rate cut
The and fell slightly in Asian trading, but remained near a three-month high. The dollar’s rise followed a sharp rise in government bond yields.
The dollar was boosted by growing expectations that the Fed will cut rates by another 25 basis points in November, amid continued signs of resilience in the US economy.
expected later today is expected to provide more clues on that front.
On the election front, improved chances for Republican candidate Donald Trump also boosted the dollar on bets that his policies will be inflationary.
Broader Asian currencies rose slightly on Thursday after reversing some recent losses.
The Australian dollar pair rose 0.2% after mixed data, while the South Korean won pair was flat after weaker-than-expected economic growth showed little in the third quarter.
The Chinese yuan pair fell 0.2%, recovering slightly from a nearly two-month high earlier this week.
The Singapore dollar pair fell 0.1%, while the Indian rupee pair fell slightly from near record highs.
