Most Asian currencies edged higher on Thursday as Federal Reserve meeting minutes reinforced expectations of interest rate cuts later this year, while the yen held near eight-month lows as investors scaled back bets on further Bank of Japan tightening.
The US Dollar Index fell 0.2% in Asia hours on Thursday after three consecutive sessions of gains. US Dollar Index Futures also traded 0.2% lower as of 04:19 GMT.
Fed rate cut bets remain firm after meeting minutes
The Fed’s September policy minutes revealed that a “substantial majority” of officials saw scope to lower borrowing costs again this year, though several policymakers warned against moving too aggressively given lingering inflation risks.
The minutes, released overnight, showed that some participants preferred to keep rates on hold until there was clearer evidence of easing price pressures and a firmer slowdown in the labour market. Others pointed to downside risks to growth, arguing that premature inaction could risk a sharper economic slowdown later.
A partial U.S. government shutdown has already delayed the release of key economic reports, including September employment and inflation data, depriving the Fed of critical inputs ahead of its next meeting.
The uncertainty kept investors cautious, with regional currencies seeing limited moves.
The South Korean won’s USD/KRW pair edged down 0.2%, while the Singapore dollar’s USD/SGD dipped 0.1%.
The Chinese yuan’s offshore pair USD/CNH rose 0.3%, while the onshore USD/CNY traded flat.
The Indian rupee’s USD/INR pair was largely unchanged, not far from record highs reached last month.
The Australian dollar’s AUD/USD pair rose 0.3%.
Japanese yen holds near 8-month low after Takaichi win
The Japanese yen’s USD/JPY pair was largely unchanged at 152.5 yen on Thursday, after five straight sessions of gains. The pair jumped to as high as 152.99 yen in the previous session, its weakest level since mid-February.
The currency has come under renewed pressure after Sanae Takaichi’s victory in the Liberal Democratic Party leadership race boosted expectations of expanded fiscal stimulus, dampening speculation of further BOJ tightening this year.
The central bank delivered its first rate hike in 17 years earlier this year, but policymakers have since signaled patience as economic momentum remains fragile.
"The recalibration of market expectations around a slower pace of Bank of Japan rate hikes continues to exert downward pressure on the yen, with spillover effects weighing on regional currencies," MUFG analysts said in a note.
Source :
https://www.investing.com/news/forex-news/asia-fx-ticks-up-as-fed-minutes-flag-likely-rate-cuts-yen-holds-near-8mth-low-4278615
