Most Asian currencies and the dollar were subdued on Thursday as investors weighed the implications of a U.S. government shutdown, while also parsing stronger inflation data from South Korea and a weaker-than-expected Australian trade balance.
The US Dollar Index, which measures the greenback against a basket of major currencies, was largely unchanged after four straight sessions of losses. US Dollar Index Futures edged up 0.1% as of 04:32 GMT.
Traders weigh US shutdown risks; analysts favour Japanese yen
The U.S. federal government entered a partial shutdown starting Wednesday after lawmakers failed to agree on a stopgap funding measure. This has led to the suspension of critical economic data releases for the present, including the September nonfarm payroll report.
The shutdown has raised concerns about the Federal Reserve’s ability to assess economic conditions, potentially affecting its monetary policy decisions. In response, the U.S. dollar weakened, and demand increased for safe-haven assets like gold.
“The moves in FX markets have been modest so far, but investors will be wary that this could be one of the longer shutdowns seen over the last 30 years,” ING analysts said in a note.
ING analysts, before the shutdown, had predicted that “the yen could emerge as an outperformer as a hedge to the US entering a government shutdown.”
The Japanese yen’s USD/JPY pair traded largely flat on Thursday after falling in the last four consecutive sessions.
S.Korea CPI rebounds; Australia trade balance shrinks
Elsewhere, the Singapore dollar’s USD/SGD edged up 0.1%, while the South Korean won’s USD/KRW pair traded flat.
Data on Tuesday showed that South Korea’s consumer price inflation rebounded in September, broadly in line with market consensus. Analysts said the rebound was not enough to halt Bank of Korea rate cuts.
The Chinese yuan’s offshore pair USD/CNH ticked 0.1% higher. Mailand markets were closed for public holidays.
The Australian dollar’s AUD/USD pair was largely steady. The country’s trade balance data for August showed a larger-than-expected contraction, with exports declining sharply.
The Indian rupee’s USD/INR pair ticked 0.1% higher, not far from record highs reached last month. The Reserve Bank of India left key interest rates unchanged at 5.5% on Wednesday.
Source :
https://www.investing.com/news/forex-news/asia-fx-dollar-muted-amid-us-shutdown-skorea-cpi-aussie-trade-data-in-focus-4267743
