Investing.com — Most Asian currencies rose slightly on Friday, while the dollar fell from its highest level in nearly two months, even as recent consumer inflation data boosted bets on a smaller rate cut from the Federal Reserve.
But most regional currencies posted losses in recent sessions as recent U.S. data suggested interest rates remained relatively higher for longer.
South Korean gains firmed even as the Bank of Korea cut rates and announced more potential cuts, while the Chinese yuan rose, with the focus squarely on more fiscal stimulus from Beijing.
Dollar Muted as Markets Weigh High CPI and High Unemployment Claims
The and fell 1% each in Asian trading, retreating from a one-month high in overnight trading.
While the dollar initially recovered after stronger-than-expected inflation for September, it pared gains after labor data showed a bigger-than-expected rise in weekly jobless claims.
Traders still remained betting that the Fed will cut rates by 25 basis points in November, showing an 81.3% chance.
But signs of weakness in the labor market are likely to prompt the Fed to cut rates consistently over the medium term, even if inflation remains relatively high.
Inflation data will be released later on Friday and is expected to provide more clues about the world’s largest economy.
Chinese Yuan Firm With Fiscal Stimulus In Sight
The Chinese yuan firmed slightly, falling 0.1%.
The focus was squarely on an upcoming Treasury briefing, where the government said it would outline plans for fiscal stimulus.
Analysts expect Beijing to provide at least 2 trillion yuan ($283 billion) in budget support, with much of the amount earmarked to support private consumption.
Saturday’s briefing comes after a briefing on recent monetary stimulus measures that was largely underwhelming. Investors also remained doubtful about China’s capacity for more fiscal measures, given the country’s high debt levels.
South Korean companies gained beyond the BOK rate cut
The South Korean won firmed on Friday, with the pair falling 0.2%.
The won’s strength came as the BOK fell 25 basis points to 3.25% – the first rate cut in more than four years.
The central bank left the door open for more easing as the Korean economy struggles with slow growth and cooling inflation.
Broader Asian currencies continued to tank, mainly posting weekly losses, while the dollar was on track for weekly gains.
The Japanese yen pair held steady at 148.71 yen after reaching close to 150 yen earlier this week.
The Australian dollar pair added 0.2% after losing ground earlier this week.
The Indian rupee pair remained close to record highs above 84 rupees.
