Investing.com–Most Asian currencies firmed Thursday, while the dollar stabilized before more interest rate signals emerged, especially from a speech by Fed Chairman Jerome Powell later in the day.
China’s yuan continued to rise after hitting a 16-month high as traders welcomed more stimulus measures from Beijing released earlier this week. Optimism about China also boosted the broader regional currency.
The Japanese yen was an outlier, extending losses overnight as sentiment toward Japan worsened ahead of the Liberal Democratic Party’s 2024 presidential elections on Friday, which will effectively determine who will be the country’s next prime minister become.
The dollar cooled in Asian trading as the recovery stalled overnight, with the greenback posting steep losses last week after a massive Fed rate cut.
Dollar stable, Powell speech awaited
The and both remained steady in Asian trading after a sharp recovery on Wednesday.
The dollar has recovered some of its losses over the past week after the Fed cut rates by 50 basis points, marking the start of an easing cycle.
The focus this week is squarely on more signals from the Fed, with a range of policymakers set to speak in the coming days. will speak later on Thursday.
The numbers – the Fed’s favorite inflation gauge – will be released on Friday and are also expected to play a role in the Fed’s next move. Before that, a revised second-quarter reading and weekly data will be released on Thursday.
The Chinese Yuan Firms as Stimulus Cheers Continue
The Chinese yuan pair fell 0.2% on Thursday, remaining at its lowest level since May 2023.
The yuan rallied after Beijing unveiled a series of major stimulus measures aimed at boosting growth. The People’s Bank reduced reserve requirements for banks by 50 basis points and at the same time lowered mortgage rates.
This measure strengthened confidence in a Chinese economic recovery, boosting the yuan. But looser monetary conditions are expected to limit the yuan’s recovery.
Optimism about China boosted other Asian currencies, with the Australian dollar pair rising 0.3%.
The South Korean won pair fell 0.3%, while the Singapore dollar pair fell 0.2%. The Indian rupee pair rose slightly after rising on Wednesday.
The Japanese yen pair rose 0.1%, moving further from its 2024 low, as sentiment toward Japan turned uncertain ahead of Friday’s LDP elections that will determine the country’s next prime minister.
Analysts expect a leadership change in Japan to hamper the Bank of Japan’s plans to raise interest rates in the near term.
