Asian currencies and the U.S. dollar traded in narrow ranges on Tuesday as investors awaited Federal Reserve Chair Jerome Powell’s speech later in the day, following a recent rate cut and forecast of more reductions.
The US Dollar Index, which measures the greenback against a basket of major currencies, was largely unchanged after falling in the previous session.
Investors gauge Fed rate path; Powell’s speech awaited
Investors remain guarded after the Fed’s rate decision last week, when it cut interest rates by 25 basis points to a range of 4.00-4.25%, its first cut since last December.
The decision was accompanied by the dot-plot projections, which now show most policymakers expecting two more rate cuts before year-end.
Fed Governor Stephen Miran, in a Monday speech, emphasised risks to the labor market and warned that current policy remains restrictive. He had voted for an outsized 50 bps cut last week.
Jerome Powell is scheduled to speak on Tuesday, while other Fed officials will follow in the coming days.
“Investors are attempting to gauge whether Powell’s cautious tone on the need for more cuts is shared by the majority of the FOMC,” ING analysts said in a note.
Traders also remain watchful of Friday’s U.S. core Personal Consumption Expenditures (PCE) inflation report, which is the Fed’s preferred gauge.
ING analysts expect a 0.2% month-on-month rise, adding that the data “should reinforce expectations for two cuts by year-end.”
Asia FX muted; Australia business activity in focus
Asian currencies remained rangebound amid a thin regional economic calendar.
The Japanese yen’s USD/JPY traded largely flat, while the Singapore dollar’s USD/SGD edged 0.1% higher.
The South Korean won’s USD/KRW pair gained 0.3%, while the Indian rupee’s USD/INR ticked up 0.2%.
The Australian dollar’s AUD/USD edged 0.2% lower. A private survey on Tuesday showed that Australia’s business activity growth slowed in September as U.S. tariffs weighed on exports and new orders.
In China, both the yuan’s onshore USD/CNY and the offshore USD/CNH pairs traded unchanged. A day earlier, the country’s central bank left its key lending rates unchanged near record lows, as expected.
Source :
https://www.investing.com/news/forex-news/asia-fx-dollar-subdued-ahead-of-feds-powell-speech-4250293
