Investing.com–Most Asian currencies rose slightly on Thursday, paring a benchmark for recent losses, while the dollar stabilized near a seven-week peak ahead of key consumer inflation data.
Regional currencies have suffered losses over the past week amid growing doubts about the pace of future Federal Reserve rate cuts.
This trend was somewhat offset by the minutes of the Fed’s September meeting, which showed that policymakers fully supported the central bank’s 50 basis point cut at the time. But they also remained cautious about the pace of future easing.
An improvement in sentiment towards China also boosted Asian currencies, as Beijing announced plans to roll out fiscal stimulus.
Dollar stable with CPI data on tap
The and fell slightly in Asian trading, but remained near a seven-week high earlier this week.
The focus was squarely on inflation data due later in the day, which will likely play a role in the Fed’s interest rate plans. The figures are expected to show that overall CPI inflation declined slightly, but remained stable.
Thanks to strong payroll data released last week, traders have dismissed bets that the central bank will cut rates by another 50 basis points in November.
Traders were pricing in a 79.5% chance of a 25 basis point cut in November, and a 20.5% chance of a hold.
Chinese Yuan Companies With Fiscal Incentives In Focus
The Chinese yuan pair fell 0.2%, ending recent weakness as traders looked for more stimulus from Beijing to support growth.
China’s Finance Ministry said it will hold a briefing on Saturday to outline plans for fiscal stimulus, after a series of recent monetary stimulus largely disappointed markets.
Still, more stimulus heralds yuan weakness, especially if local interest rates fall further.
Most Asian units firmed on Thursday, but had to factor in recent losses. The Japanese yen pair fell 0.1% after hitting a more than two-month high. The currency received little support from stronger-than-expected inflation data as markets bet the Bank of Japan will have difficulty raising interest rates further.
The South Korean won pair rose 0.3%, while the Singapore dollar pair fell slightly.
The Indian rupee pair remained close to record highs, with the rupee facing weakness after the Reserve Bank of India signaled a shift from its hawkish stance.
The Australian dollar pair rose 0.2%, showing some optimism about China.
