Investing.com — Most Asian currencies remained within a tight range on Tuesday, with the dollar stabilizing after recent losses, while the focus remained squarely on a tight U.S. presidential race and an upcoming Federal Reserve meeting.
The Australian dollar firmed slightly after the Reserve Bank of Australia kept rates unchanged and warned that rates will remain high in the near term on concerns about persistent inflation.
In regional markets, the focus also remained on an ongoing meeting of China’s National People’s Congress, where policymakers are widely expected to outline plans for more fiscal spending.
Most Asian currencies suffered steep losses through October amid growing speculation that Donald Trump will win a second term. But this trade was reversed in recent sessions, providing some relief to regional markets.
ticks higher after RBA
The Australian dollar’s AUDUSD pair rose 0.1% after the RBA said monetary policy will remain restrictive on concerns about persistent inflation.
The move was widely expected by markets as the RBA has given little indication that it plans to cut rates.
While high longer-term interest rates bode well for the Australian dollar, the currency’s gains were hampered by the RBA, which highlighted increased uncertainty about the Australian economy, with growth expected to slow further in coming quarters.
Still, the RBA is now expected to keep rates steady until at least early 2025 to combat persistent inflation, putting it in contrast to other major global central banks.
Dollar stable due to elections, Fed in focus
The and both rose 0.1% each in Asian trading, stabilizing after losses over the past two sessions.
The dollar was partly hit by a weakening “Trump trade” as recent polls showed Trump and Kamala Harris heading into a close presidential race. Voting will begin later on Tuesday.
The focus later this week is also on a Fed meeting, where the central bank is widely expected to make a smaller cut than the 50 basis points in September.
Traders will look for more signals from Fed Chairman Jerome Powell about the bank’s plans to cut rates further, especially as recent data showed U.S. inflation and the economy’s resilience have been stubborn.
But a deterioration in the labor market was also seen, which could keep the Fed focused on further easing.
Broader Asian currencies were flat ahead of the US election and the Fed meeting kept traders on the sidelines.
The Chinese yuan pair rose 0.1%, with the focus remaining on an NPC meeting expected to provide more clues about China’s plans for fiscal stimulus.
The Japanese yen weakened and remained near its weakest level in three months, with the pair rising 0.2%.
The South Korean won pair rose 0.5% after data showed expectations were missed in October, likely prompting further interest rate cuts from the Bank of Korea.
The Indian rupee pair remained well above the 84 rupee level after hitting a record high earlier in the session.
