Investing.com — Most Asian currencies rose higher on Friday after the dollar weakened on continued expectations of a U.S. Federal Reserve rate cut in December, while the Japanese yen rose on warmer-than-expected inflation data from Tokyo.
Traders boosted expectations for a 25 basis point cut delivered by the Fed at its December meeting, despite US data from earlier this week showing the economy was still resilient and inflation remained stubborn.
The , and fell 0.3% each in Asian trading.
Investors turned to regional economic indicators for clues as U.S. markets were closed Thursday for Thanksgiving, resulting in thin volumes on the last trading day of the month.
In Japan, data showed Tokyo yields rose more than expected in November, pointing to growing inflationary pressures that reinforced expectations that the Bank of Japan will raise rates in December.
The Japanese yen reached its strongest level against the dollar in just over a month, with the pair down almost 1%. The pair is expected to fall almost 3% this week.
Asia FX expects losses in November as Trump boosts dollar
Most regional currencies edged higher on Friday but are heading for monthly losses as they faced downward pressure from US Republican Donald Trump’s November 5 election victory. Trump has proposed higher tariffs on China, rekindling fears of a global trade war that could have dire consequences. for Asian economies that are highly dependent on trade.
The Chinese yuan’s onshore pair fell 0.2%, drifting slightly away from a four-month high. But the pair was set for a monthly gain of 1.6%.
The Singapore dollar pair fell 0.2%, while the Thai baht fell 0.5%. Both pairs were on track to gain almost 1.5% in November.
The South Korean pair remained largely unchanged, a day after the Bank of Korea called its second straight meeting in a surprise move. However, the won is expected to lose almost 1.6% against the dollar this month.
The Australian dollar pair rose 0.3% on Friday but was heading for a monthly loss of 1%, while the Indian rupee pair is expected to rise 0.5% in November.
The Fed cuts rates by 25 basis points in December
According to CME Fed Watch Tool, investors now see a 67% chance of a Fed rate cut in December, up from 55% a week ago. This has led to some weakness in the dollar in the short term.
The dollar index fell nearly 1.6% this week, including crucial data points. On Wednesday, data showed that — the Fed’s preferred measure of underlying inflation — recovered in line with expectations. Another analysis showed that the US economy grew at a strong pace in the third quarter.
Combined with the data, the Fed’s latest minutes showed policymakers backing a gradual rate cut, raising doubts about long-term policy, especially in light of the inflation measures under Trump’s presidency.
