Asian Currencies Flat as Dollar Holds Near Three-Month High
Most Asian currencies traded in a narrow range on Thursday, while the U.S. dollar remained steady near a three-month high. The move came as markets scaled back expectations for a Federal Reserve rate cut in December, following stronger U.S. labor data and persistent uncertainty from the ongoing government shutdown.
Dollar Supported by Strong Economic Data
The dollar index and dollar index futures dipped about 0.1% in Asian trading, but both stayed close to their recent three-month highs. The greenback continued to gain support from growing confidence that the Federal Reserve will keep rates unchanged in December.
Fed Chair Jerome Powell cautioned earlier this week that a rate cut in December was “not a given,” reinforcing the dollar’s strength.
Private-sector data also supported the dollar’s resilience. The ADP nonfarm employment report for October showed stronger-than-expected job growth, signaling a robust U.S. labor market. Additionally, Purchasing Managers Index (PMI) data pointed to solid business activity, suggesting the economy remains stable despite political headwinds.
As the U.S. government shutdown entered its 36th day, traders turned their focus to private data for economic cues, as several official reports were delayed. According to CME FedWatch, the probability of a December rate cut dropped to 59.3%, down from 70.3% the previous day.
Yen Strengthens on Wage Growth Momentum
The Japanese yen found support after data showed wage incomes rose 1.9% in September, matching expectations and improving from 1.3% in August, the slowest pace in over a year.
The stronger wage growth gave the Bank of Japan (BOJ) further reason to consider a rate hike, aligning with recent BOJ meeting minutes that signaled policymakers leaning toward tightening monetary policy before year-end.
As a result, the USD/JPY pair slipped 0.2%, reflecting firmer sentiment around the yen.
Other Asian Currencies Stay Range-Bound
Elsewhere in Asia, most currencies showed limited movement amid the stronger U.S. dollar.
The Australian dollar (AUD/USD) was little changed despite robust export and trade balance data for September.
The Chinese yuan (USD/CNY) also remained flat even as the People’s Bank of China set a slightly stronger daily midpoint.
The Singapore dollar (USD/SGD) edged 0.1% lower, while the Taiwan dollar (USD/TWD) gained 0.2%.
Meanwhile, the Indian rupee (USD/INR) rose 0.1%, holding well above the 88 level against the dollar.
