Investing.com — Most Asian currencies weakened Thursday, while the dollar rose to a one-year high, on data showing continued inflation in the U.S., with focus now turning to an upcoming speech by Jerome Powell, Chairman of the Federal Reserve.
Sentiment towards regional markets remained weak after China’s recent stimulus measures disappointed, while the prospect of more US protectionism under Donald Trump’s presidency also kept traders favoring the dollar.
Most Asian currencies posted steep losses on this trade last week, with the Japanese yen and Chinese yuan among the hardest hit.
Dollar at peak after one year of CPI data; Powell in the picture
The and both rose almost 0.2% in Asian trading, posting sharp overnight gains.
The consumer price index data is in line with expectations for October. But rates still rose from the previous month, but remained steady and well above the Fed’s annual target of 2%.
While the data fueled expectations that the Fed will still cut rates by 25 basis points in December, the long-term outlook for rates became more uncertain.
Trump’s election has also raised long-term expectations for interest rates, thanks to bets on more expansionary policies during his second term.
The focus now was on an upcoming speech from , later on Thursday, for more clues on interest rates. Powell had reiterated the Fed’s data-driven approach to future easing after the central bank cut rates by 25 basis points last week.
Australian dollar at three-month low after RBA comments, jobs data
The Australian dollar weakened slightly on Thursday, with the pair falling 0.1% to a three-month low.
Reserve Bank of Australia Governor Michele Bullock said interest rates were unlikely to rise further but would remain stable until the bank was confident inflation was easing further.
Bullock’s comments were accompanied by data showing Australia slowing in October after six consecutive months of strong growth. A weaker labor market fueled expectations of a further cooling in inflation, with analysts predicting the RBA will start cutting rates from the first quarter of 2025.
Broader Asian currencies weakened on Thursday, posting steep losses in recent sessions. The Japanese yen pair rose 0.3% to 155.85 yen, a high in more than three months. The yen was also close to the level that last prompted government intervention in the foreign exchange market.
The Chinese yuan pair rose 0.3% to its highest in more than three months after the yuan was hit by disappointing stimulus measures from China. Sentiment towards China was also depressed by the prospect of high US trade tariffs against the country under the Trump administration.
The South Korean won pair rose 0.1%, while the Singapore dollar pair rose 0.2%.
The Indian rupee pair remained steady after hitting a record high of over 84.6 rupees this week.
