Investing.com — Most Asian currencies firmed, albeit slightly, on Thursday after the dollar’s recovery stalled ahead of key economic data that will likely play a role in the outlook for rate cuts.
Regional currencies came under renewed pressure this week as the dollar recovered from a 13-month low amid growing speculation about how much the Federal Reserve will cut interest rates this year.
Fears of renewed trade tensions between China and the West also dampened general sentiment.
The dollar recovery is cooling off thanks to GDP and PCE tests are available
The and both fell 0.1% in Asian trading after the recovery from 13-month lows cooled.
The focus turns to a revised reading of the second quarter figures, due later on Thursday, for more insight into the US economy.
The first reading of second-quarter GDP showed the US economy remained resilient, raising hopes that the world’s largest economy was heading for a soft landing. But the robust growth also gives the Fed less incentive to cut rates sharply.
The numbers – the Fed’s favorite inflation gauge – are due Friday and are likely to play a role in the interest rate outlook.
Traders are divided on a cut of 25 to 50 basis points in September, it appears.
Japanese Yen Stable, Tokyo CPI Waited
The Japanese yen remained stable on Thursday after a strong rally earlier this week. The pair was hovering around 144.56 yen after falling to a low of 143 yen on Tuesday.
The yen has been supported by continued bets that the Bank of Japan will raise rates further this year, following a series of aggressive signals from BOJ officials. But inflation data from the country somewhat eluded the BOJ’s expectations for a steady rise in inflation.
The focus now is on data from Tokyo, which will be released on Friday. These figures act as a gauge for national inflation and will likely play a role in expectations for rate increases.
Broader Asian currencies advanced after showing some weakness earlier this week.
The Chinese yuan pair fell 0.2%, supported by a series of stronger-than-expected midpoint fixes by the People’s Bank.
But sentiment toward China remained gloomy amid fears of a trade war with the West, especially after Canada joined the U.S. and European Union in imposing high tariffs on China’s electric vehicle sector.
The Australian dollar pair rose 0.3%, extending gains from the previous session, as a sticky July boosted expectations for an aggressive Reserve Bank, although analysts were unconvinced the RBA will raise rates further.
The South Korean won pair fell 0.1%, while the Singapore dollar pair fell 0.2%.
The Indian rupee pair fell slightly after testing the 84 rupee level earlier this week, remaining subdued.
